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  • Apple cracks down on NFT functionality, social post boosts with App Store rules

    Apple cracks down on NFT functionality, social post boosts with App Store rules

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    Apple rolled out software updates — iOS 16.1, iPad OS 16.1, and macOS Ventura — to all users on Monday. It also introduced new App Store rules that limit features unlocked through NFTs and mandates apps to use Apple’s payment method to purchase “boosts” for posts on social media.

    NFTs

    The company said apps are allowed to list, mint, and transfer, and let users view their own NFTs (Non-Fungible Tokens). However, the ownership of NFTs shouldn’t unlock any more features within the app. Plus, these apps can let users browse other collections but they shouldn’t show external links, buttons, or call to action to purchase NFTs. Users can only purchase NFTs through Apple’s in-app payment system.

    The company is also prohibiting apps to use other mechanisms such as QR codes or cryptocurrencies to give special access to users.

    “Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, cryptocurrencies and cryptocurrency wallets, etc,” it said.

    Folks from the industry pointed out that these changes could have serious implications on the functionality of web3-dependant apps (including games) within the Apple ecosystem. Until now, they might be used NFTs as a way to thwart Apple’s App Store fees and simultaneously as a token or key to unlock features for users — but that won’t be allowed anymore.

    Notably, Meta has started rolling out features for users to show off their NFTs across both Instagram and Facebook. The company has also expressed a desire to open a marketplace for artists to sell their digital creations. But this step from Apple means it might have to pay App Store fees if the marketplace is made available on iOS.

    Crypto exchanges

    The company is also cracking down on cryptocurrency exchanges as it now mandates them to have “appropriate licensing and permissions to provide a cryptocurrency exchange” in all regions they operate in. So Apple now has the power to remove a crypto exchange from a local App Store if it deems the app to be illegal for that region.

    Social media boosts

    With new App Store rules, Apple said that marketers don’t need to use in-app purchases to manage and purchase campaigns across different media types like TV, apps, and outdoors. However, they will have to use Apple’s in-app purchase system to buy boosts for social media posts— this would only apply to apps offering in-app tools for promoting posts. That means Apple will take a cut out of those sales, which might result in platforms hiking boost fees.

    This could impact companies like Meta, TikTok, and Tinder, which offer in-app boosts.

    Other changes

    • Apple has now included concepts that gain profit from current events such as “violent conflicts, terrorist attacks, and epidemics” under the objectionable content section.
    • Apple is also adding ‘hookup’ apps or apps “that may include pornography or be used to facilitate prostitution or human trafficking and exploitation” in the objectionable content section.
    • The company is prohibiting apps from unauthorized usage of music from iTunes or Apple Music as a soundtrack for a game or as background music to a video or a picture collage.
    • Smart home apps that support the Matter IoT standard must use Apple’s support framework to initiate pings.
    • Developers must provide a full-access to App Store reviewers through an active demo account or demo mode so they can test account-based functionalities.

    Over the last few years, Apple has had to reduce its App Store fees and allow third-party payment systems for in-app purchases in many regions across the world. With these new rules, the company has added new possible ways to earn money using the App Store. These changes have also brought back concerns regarding Apple’s anti-competitive practices and its tight control over how apps conduct their business on the App store.

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    Ivan Mehta

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  • Apple raises prices for music and TV streaming services | CNN Business

    Apple raises prices for music and TV streaming services | CNN Business

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    CNN Business
     — 

    Apple on Monday raised the price of its music and video streaming services, in the latest example of streaming products getting more expensive in recent months.

    An Apple Music subscription for individuals will now cost $10.99 per month, up from $9.99, and a family plan supporting up to five people is now $16.99 per month, up from $14.99.

    The price of Apple TV+ will increase to $6.99 per month, a 40% increase from the $4.99 it cost previously, the company said Monday.

    In a statement to CNN Business, Apple

    (AAPL)
    said the change in Apple

    (AAPL)
    Music’s cost is “due to an increase in licensing costs, and in turn, artists and songwriters will earn more for the streaming of their music.”

    The company also said Apple TV+ was introduced “at a very low price because we started with just a few shows and movies.” Apple has since expanded its slate of offerings and won the best picture award at the Oscars this year for the movie “CODA.”

    But the new price hikes could be the latest test of how much consumers are willing to spend on streaming products at a time when rising inflation has more broadly driven costs up for Americans across a wide range of services.

    In August, Disney announced that the price of the premium tier of Disney+ would jump $3 to $10.99 per month, its largest price increase since the streaming service launched nearly three years ago. Hulu, which is majority owned by Disney, raised its subscription prices earlier this month.

    Apple’s price increase also comes as macroeconomic pressures have hit the tech sector especially hard, pushing companies to scramble for new ways to generate revenue. Apple, which has seen its stock decline nearly 18% so far this year, has increasingly bet on revenue from its subscription services to bolster its bottom line in recent years at a time when iPhone sales growth has slowed.

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  • Top VCs have expanded into broader asset managers; is the model sustainable?

    Top VCs have expanded into broader asset managers; is the model sustainable?

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    Last week at TechCrunch’s annual Disrupt event, this editor sat down with VCs from two firms that have come to look similar in ways over the last five or so years. One of those VCs was Niko Bonatsos, a managing partner at General Catalyst (GC), a 22-year-old firm that began as an early-stage venture outfit in Boston and that now manages many tens of billions of dollars across as a registered investment advisor. Bonatsos was joined onstage by Caryn Marooney, a partner at Coatue, which began life as a hedge fund in 1999 and now also invests in growth- and early-stage startups. (Coatue is managing even more billions than General Catalyst – upwards of $90 billion, per one report.)

    Because of this blurring of what it means to be a venture firm, much of the talk centered on the outcome of this evolution. We wondered: does it make perfect sense that firms like Coatue and GC (and Insight Partners and Andreessen Horowitz and Sequoia Capital) now tackle nearly every stage of tech investing, or would their own investors be better off if they’d remained more specialized?

    While Bonatsos called his firm and its rivals “products of the times,” it’s easy to wonder whether their products are going to remain quite as attractive in the coming years. Most problematic right now: the exit market is all but frozen. It’s also challenging to deliver outsize returns when you’ve raised the amounts that we’ve seen flow to venture firms over the last handful of years. General Catalyst, for example, closed on $4.6 billion back in February. Coatue meanwhile closed on $6.6 billion for its fifth growth-investment strategy as of April, and it’s reportedly in the market for a $500 million early-stage fund at the moment. That’s a lot of money to double or triple, not to mention grow tenfold. (Traditionally, venture firms have aimed to 10x investors’ dollars.)

    In the meantime, not a single firm — about which I’m aware, anyway — has expressed plans to give investors back some of the massive amounts of capital it has raised.

    I was thinking today about last week’s conversation and have some additional thoughts about what we discussed on stage (in italics). What follows are excerpts from the interview. To catch the whole conversation, you can watch it around the 1:13-minute mark in the video below.

    TC: For years, we’ve seen a blurring of what a “venture” firm really means. What is the outcome when everyone is doing everything?

    NB: Not everyone has earned the right to do everything. We’re talking about 10 to maybe 12 firms that [are now] capable of doing everything. In our case, we started from being an early-stage firm; early stage continues to be our core. And we learned from serving our customers – the founders – that they want to build enduring companies and they want to stay private for longer. And as a result, we felt like raising growth funds was something that could meet their demands and we did that. And over time, we decided to become a registered investment advisor as well, because it made sense [as portfolio companies] went public and [would] grow very well in the public market and we could continue to be with them [on their] journey for a longer period of time instead of exiting early on as we were doing in previous times.

    CM: I feel like we’re now in this place of pretty interesting change . . .We’re all moving to meet the needs of the founders and the LPS who trust us with their money [and for whom] we need to be more creative. We all go to where the needs are and the environment is. I think the thing that stayed the same is maybe the VC vest. The Patagonia vest has been pretty standard but everything else is changing.

    Marooney was joking of course. It should also be noted that the Patagonia vest has fallen out of fashion, replaced by an even more expensive vest! But she and Bonatsos were right about meeting the demands of their investors. To a large degree, their firms have merely said yes to the money that’s been handed to them to invest. Stanford Management Company CEO Robert Wallace  told The Information just last week that if it could, the university would stuff even more capital into certain venture coffers as it seeks our superior returns. Stanford has its own scaling issue, explained Wallace: “As our endowment gets bigger, the amount of capacity that we receive from these very carefully controlled, very disciplined early-stage funds doesn’t go up proportionally . . .We can get more than we got 15 or 20 years ago, but it’s not enough.”

    TC: LPs had record returns last year. But this year, their returns are abysmal and I do wonder if it owes in some part to the overlapping stakes they own in the same companies as you’re all converging on the same [founding teams]. Should LPs be concerned that you’re now operating in each other’s lanes?

    NB:  I personally don’t see how this is different than how it used to be. If you’re an LP at a top endowment today, you want to have a piece of the top 20 tech companies that get started every year that could become the Next Big Thing. [The difference is that] now, the outcomes in more recent years have been much larger than ever before.  . . . What LPs have to do, as has been the case over the last decade, is to invest in different pools of capital that the VC firms give them allocation to. Historically, that was in early-stage funds; now you have options to invest in many different vehicles.
    In real time, I moved on to the next question, asking whether we’d see a “right sizing” of the industry as returns shrink and exit paths grow cold. Bonatsos answered that VC remains a “very dynamic ecosystem” that, “like other species, will have to go through the natural selection cycle. It’s going to be the survival of the fittest.” But it probably made sense to linger longer on the issue of overlapping investments because I’m not sure I agree that the industry is operating the same way it has. It’s true that the exits are larger, but there is little question that many privately held companies raised too much money at valuations that the public market was never going to support because so many firms with far too much money were chasing them.

    TC: In the world of startups, power shifts from founders to VCs and back again, but until very recently, it had grown founder friendly to an astonishing degree. I’m thinking of Hopin, a  virtual events company that was founded in 2019. According to the Financial Times, the founder was able to cash out nearly $200 million worth of shares and still owns 40% of the company, which I find mind-blowing. What happened?

    NB. Well, we were one of the investors in Hopin.

    TC: Both of your firms were.

    NB: For a period of time, it was the fastest-growing company of all time. It’s a very profitable business. Also COVID happened and they had the perfect product at the perfect time for the entire world. Back then Zoom was doing really, really well as a company. And it was the beginning of the crazy VC funding acceleration period that gets started in the second half of 2020. So a lot of us got intrigued because the product looked perfect. The market opportunity seemed pretty sizable, and the company was not consuming any cash. And when you have a very competitive market situation where you have a founder who receives like 10 different offers, some offers need to sweeten the deal a little bit to make it more convincing.

    TC: Nothing against founders, but the people who have since been laid off from Hopin must have been seething, reading [these details]. Were any lessons learned, or will the same thing happen again because that’s just the way things work?

    CM: I think that people who start companies now are no longer under that like [misperception that] everything goes up into the right. I think the generation of people that start now on both sides are going to be far more clear-eyed. I also think there was this sense of like, “Oh, I just want money with no strings attached.” . . .  And that has dramatically changed [to], “Have you seen any of this before because I could use some help.”

    NB: Absolutely. Market conditions have changed. If you’re raising a growth round today and you’re not one of one [type of company] or exceeding your plan dramatically, it’s probably harder because a lot of the crossover funds or late-stage investors  go open up their Charles Schwab brokerage account and they can see what the terms are there and they’re better. And they can buy today; they can sell next week. With a private company, you can’t do that.  At the very early stage, it’s a little bit of a function of how many funds are out there that are eager to write checks and how much capital they’ve raised, so at the seed stage, we haven’t seen much of a difference yet, especially for first checks. If you’re a seed company that raised last year or the year before, and you haven’t made enough progress to earn the right to raise a Series A, it’s a little bit harder. . .To the best of my knowledge, I haven’t seen companies decide to raise a Series A with really nasty terms. But of course we’ve seen this process take longer than before; we’ve seen some companies decide to raise a bridge round [in the hopes of getting to that A round eventually].

    For what it’s worth, I suspect early founder liquidity is a much bigger and thornier issue than VCs want to let on. In fact, I talked later at Disrupt with an investor who said that he has seen a number of founders in social settings whose companies have been floundering but because they were able to walk away with millions of dollars at the outset, they aren’t exactly killing themselves trying to save those companies. 

    TC: The exit market is cooked right now. SPACs are out. Only 14 companies have chosen a direct listing since [Spotify used one] in 2018. What are we going to do with all these many, many, many companies that have nowhere to go right now?

    NB: We’re very fortunate, especially in San Francisco, that there are so many tech companies that are doing really, really well. They have a lot of cash on their balance sheet and hopefully at some point, especially now that valuations seem to be more rationalized, they will need to innovate through some M&A. In our industry, especially for the large firms like ours, we want to see some smaller exits, but it’s about the enduring companies that really can go the distance and produce a 100x return and pay for the whole vintage or the whole portfolio. So it’s an interesting time, what’s going on right now in the exit landscape. With the terms rationalizing, I would assume we’ll see more M&A.

    Naturally, there will never be enough acquisitions to save most of the companies that have received funding in recent years, but to Bonatsos’s point, VCs are betting that some of these exits will be big enough to keep institutional investors as keen on VC as they’ve grown. We’ll see over the next couple of years if this gamble plays out the way they expect.

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    Connie Loizos

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  • Japan steps up push to get public buy-in to digital IDs

    Japan steps up push to get public buy-in to digital IDs

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    TOKYO — Japan has stepped up its push to catch up on digitization by telling a reluctant public they have to sign up for digital IDs or possibly lose access to their public health insurance.

    As the naming implies, the initiative is about assigning numbers to people, similar to Social Security numbers in the U.S. Many Japanese worry the information might be misused or that their personal information might be stolen. Some view the My Number effort as a violation of their right to privacy.

    So the system that kicked off in 2016 has never fully caught on. Fax machines are still commonplace, and many Japanese conduct much of their business in person, with cash. Some bureaucratic procedures can be done online, but many Japanese offices still require “inkan,” or seals for stamping, for identification, and insist on people bringing paper forms to offices.

    Now the government is asking people to apply for plastic My Number cards equipped with microchips and photos, to be linked to drivers licenses and the public health insurance plans. Health insurance cards now in use, which lack photos, will be discontinued in late 2024. People will be required to use My Number cards instead.

    That has drawn a backlash, with an online petition demanding a continuation of the current health cards drawing more than 100,000 signatures in a few days.

    Opponents of the change say the current system has been working for decades and going digital would require extra work at a time when the pandemic is still straining the medical system.

    But the reluctance to go digital extends beyond the health care system. After numerous scandals over leaks and other mistakes, many Japanese distrust the government’s handling of data. They’re also wary about government overreach, partly a legacy of authoritarian regimes before and during World War II.

    Saeko Fujimori, who works in the music copyright business, said she’s supposed to get My Number information from the people she deals with, but many balk at giving it out. And no one is all that surprised she has trouble getting that information, given how unpopular it is.

    “There is a microchip in it, and that means there could be fraud,” said Fujimori, who has a My Number but doesn’t intend to get the new card. “If a machine is reading all the information, that can lead to mistakes in the medical sector, too.”

    “If this was coming from a trustworthy leadership and the economy was thriving, maybe we would think about it, but not now,” Fujimori said.

    Something drastic may have to happen for people to accept such changes, just as it took a devastating defeat in World War II for Japan to transform itself into an economic powerhouse, said Hidenori Watanave, a professor at the University of Tokyo.

    “There’s resistance playing out everywhere,” he said.

    Japanese traditionally take pride in meticulous, handcraft-quality workmanship and many also devote themselves to carefully keeping track of documents and neatly filing them away.

    “There are too many people worried their jobs are going to disappear. These people see digitization as a negation of their past work,” said Watanave, who spells his last name with a “v” instead of the usual “b.”

    The process of getting an existing My Number digitized is time consuming and very analog, it turns out. One must fill out and mail back forms sent by mail. Last month’s initial deadline was extended, but only about half of the Japanese population have a My Number, according to the government.

    “They keep failing in anything digital and we have no memories of successful digital transformation by the government,” said Nobi Hayashi, a consultant and technology expert.

    Hayashi cited as a recent example Cocoa, the government’s tracing app for COVID-19, which proved unpopular and often ineffectual. He says the digital promotion effort needs to be more “vision-driven.”

    “They don’t show a bigger picture, or they don’t have one,” Hayashi said.

    Koichi Kurosawa, secretary-general at the National Confederation of Trade Unions, a 1 million-member grouping of labor unions, said people would be happier with digitization if it made their work easier and shorter, but it was doing just the opposite at many Japanese work places.

    “People feel this is about allocating numbers to people the way teams have numbers on their uniforms,” he said. “They are worried it will lead to tighter surveillance.”

    That’s why people are saying No to My Number, he said in a phone interview with The Associated Press.

    Yojiro Maeda, a cooperative research fellow at Nagasaki University who studies local governments, thinks digitization is needed, and My Number is a step in the right direction.

    “You just have to do it,” Maeda said.

    On Monday, Prime Minister Fumio Kishida acknowledged concerns about My Number cards. He told lawmakers in Parliament that the old health insurance cards will be phased out but the government will arrange for people to continue to use their public health insurance if they are paying into a health plan.

    Japan’s Minister of Digital Affairs, Taro Kono, acknowledged in a recent interview with The Associated Press that more is needed to persuade people of the benefits of going digital.

    “To create a digitized society, we need to work on developing new infrastructure. My Number cards could serve as a passport that will open such doors,” Kono said. “We need to win people’s understanding so that My Number cards get used in all kinds of situations.”

    ———

    Yuri Kageyama is on Twitter at https://twitter.com/yurikageyama

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  • FTC seeks to clamp down on alcohol delivery service Drizly and its CEO after data breach | CNN Business

    FTC seeks to clamp down on alcohol delivery service Drizly and its CEO after data breach | CNN Business

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    Washington
    CNN Business
     — 

    The Federal Trade Commission is seeking tough new restrictions against Drizly, the alcoholic beverage delivery platform, after what US regulators allege were repeated security failures that compromised the data of 2.5 million people.

    The proposed order against Drizly, if finalized, would force the company to beef up its cybersecurity and limit its data collection practices, a common requirement in FTC privacy orders. But in a significant step, the FTC also specifically named the company’s CEO, James Cory Rellas, imposing what would be binding obligations on him and all of his future business activities, at Drizly or otherwise. Drizly would also be required to delete any data it holds on consumers that isn’t strictly necessary for it to run its service, the FTC said in a release.

    “We take consumer privacy and security very seriously at Drizly, and are happy to put this 2020 event behind us,” a Drizly spokesperson told CNN Business.

    The Drizly order reflects recent promises by top FTC officials to use novel remedies — such as forcing businesses to destroy “ill-gotten data” — in the agency’s increasingly tech-focused work, as well as vows to hold individual executives personally accountable if they’re found to be responsible for illegal conduct that harms consumers.

    According to the FTC, Drizly — which Uber acquired last year — had been aware of its cybersecurity problems since 2018, after hackers gained access to Drizly employee credentials that then allowed them to use Drizly’s cloud computing accounts to mine cryptocurrency. In another incident in 2020, a hacker compromised Drizly’s corporate network and stole customer data. At least some of that personal data was then offered for sale on underground hacker forums, the FTC said.

    FTC orders have come under mounting scrutiny in recent years, particularly after Twitter’s former head of security came forward with a whistleblower report alleging that the company had never been on track to comply with its FTC obligations.

    Since then, FTC Chair Lina Khan has told lawmakers the agency is increasingly interested in naming executives in consent orders as a way to ensure businesses are held accountable.

    As part of the Drizly order, Rellas will have to implement cybersecurity programs at any future business he works for where he is CEO or majority owner and where the business collects personal data from more than 25,000 people.

    The FTC will determine whether to finalize the order after a 30-day public comment period that’s expected to begin when a summary of its provisions is published in the Federal Register.

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  • Apex Space takes on satellite bus ‘bottleneck’ with seed round led by a16z

    Apex Space takes on satellite bus ‘bottleneck’ with seed round led by a16z

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    Apex Space, a startup that aims to transform satellite bus manufacturing, emerged from stealth Monday with a $7.5 million seed round led by Andreessen Horowitz.

    The Los Angeles-based company has set its sights on the satellite bus — the part of the spacecraft that hosts the payload — which it says is the “new bottleneck” hitting the space industry. Apex’s two co-founders, Ian Cinnamon and Maximilian Benassi, said in a blog post that they independently observed core changes to the industry that convinced them that a new satellite bus manufacturing solution was needed.

    Cinnamon, a technology startup founder whose company, Synapse Technology, was acquired by Palantir in 2020, said he saw payload customers being “held back” by the long and costly process associated with building custom satellite buses. Benassi, an engineer whose career includes a six-year tenure at SpaceX and nearly a year-and-a-half at Astra, observed changes to launch economics that make mass manufacturing — rather than the bespoke engineering process that’s characterized satellite buses thus far — more sensible.

    “Given this transformative change, we must begin to think about spacecraft differently and adapt to the new market conditions,” the pair said. “We cannot just build spacecraft. We must manufacture them at scale.”

    This approach, which Cinnamon described in an interview with TechCrunch as scalable and product-led, is a major departure from traditional satellite bus manufacturing. Apex aims to deliver satellite busses to customers in a matter of months, rather than the status quo timescale of a few years.

    Apex will come to the market with a small satellite bus called Aries, which will be capable of carrying payloads up to 94 kilograms. That platform will be suitable for missions to low Earth orbit; the startup says on its website that future products will be compatible with other missions, such as those to geosynchronous orbit. Apex also offers add-ons like insurance and flight booking. Cinnamon said the company plans on delivering the first Aries platform in 2023, followed by 5 in 2024, and continue to scale from there.

    While the two co-founders praised the likes of Astra and Rocket Lab for transforming the launch sector, these companies are also competitors, each designing satellite buses as part of a full-stop-shop solution for customers. Other major players in the satellite bus manufacturing space are Terran Orbital, which announced plans last year to build a 660,000-square-foot satellite manufacturing facility in Florida, and York Space Systems, which landed a $1.12 billion valuation after selling a majority stake to Firefly Aerospace’s owner AE Industrial Partners. But Cinnamon said Apex is differentiating itself from these players in a few different ways: the first is that the startup’s “bread and butter” will be commercial customers, rather than government customers. He added that the company is aiming to manufacture on a scale of a matter of months to keep up with demand from the commercial sector.

    The call for large-scale manufacturing clearly found resonance at Andreessen Horowitz, which launched a new fund at the beginning of this year called “American Dynamism,” led by general partner Katherine Boyle. The fund aims to invest in companies that bolster the nation’s interest and solve problems in industries like supply chain, aerospace and manufacturing (amongst others). As Boyle argued in her sweeping investment thesis, “the only immediate way to kickstart American renewal is through startups building for critical problems.” To the Apex co-founders, solving the satellite bus manufacturing problem isn’t just critical to the space industry today. It’s also key to making humans a multiplanetary species in the future.

    “If we really think about that future, do we think that all of the other spacecraft that are out there, that are moving around goods and services, that are doing imaging of Mars and the Moon, that are providing communication services, etcetera, are all of those spacecraft truly going to be built by hand as custom one-offs like they are today? Or are they actually going to be manufactured at scale? And I believe that in order to enable that future, they have to be manufactured at scale, and we want to be the first company out there to truly scale up manufacturing of these vehicles.”

    In addition to a6z, the round also saw participation from XYZ Venture Capital, J2 Ventures, Lux Capital and Village Global. The number one priority for the new funding is hiring, Cinnamon said, and the company is looking for people from new space, traditional aerospace, and outside the space sector entirely. The company will also use the raise to continue developing the Aries platform, including ordering components and beginning to assemble the manufacturing line.

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    Aria Alamalhodaei

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  • YouTube rolls out new features and an updated look | CNN Business

    YouTube rolls out new features and an updated look | CNN Business

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    CNN Business
     — 

    YouTube is rolling out what it calls a “small makeover” with a handful of new features and design changes intended to make watching videos on the platform a better experience.

    In a blog post published Monday, the company said it’s adding new tools inspired by feedback from its YouTube creator community and viewers.

    Perhaps the first thing users will notice are color changes intended to make consuming videos easier on the eyes. In addition to new vibrant colors, an ambient mode will allow the app to adjust the background color to match the video. An update to YouTube’s dark theme aims to make colors pop more on screen.

    Meanwhile, a new tool will let users fast forward or rewind to the exact spot they want to in a video — a potentially useful feature for when watching a tutorial. Other changes include a pinch-to-zoom tool, allowing users to zoom in and out of a video on mobile devices while it still plays, and a handful of tweaks coming to the video player. YouTube links, for example, in video descriptions will become buttons, and the ability to share and download videos will be “formatted to minimize distractions.” The subscribe button will also undergo some change: It’s no longer red but will be easier to find on channel and video pages, due in part to a new shape and high contrast, YouTube said.

    The new features will roll out gradually in the next few weeks.

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  • TechCrunch wants to hear Black founders’ stories of VC fundraising

    TechCrunch wants to hear Black founders’ stories of VC fundraising

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    On Friday, TechCrunch reported the latest Crunchbase venture capital data, and the news isn’t very good from a diversity point of view: Black founders raised a paltry $187 million out of the $150.9 billion in venture capital allocated in Q3 this year. To put that into perspective, that’s only 0.12% of the total investment made in the quarter.

    The story launched a conversation on Twitter about the current state of venture funds for Black founders. It unearthed pain and heartbreak, but it also brought to light the resilience of founders and investors who still have their hearts set on change. It also surfaced the reality that the powers that be — most, if not all, of the rich, white men, LPs and institutions with outsized power — are sticking to their old habits instead of doing much to truly bring about change in how venture capital is invested.

    One way to hold folks accountable is to keep openly talking about inequities. This is one reason why TechCrunch has decided to create a forum for Black founders to — anonymously or not — submit their open, honest experiences of what it is like to fundraise for their startups today.

    We want to hear what investors still say to you behind closed doors. We want to know how often you’ve had to codeswitch, and what the anxiety levels are still like when walking into certain rooms. We want to know the good parts, like who are the allies, but also the bad parts, like who are the bullies.

    We acknowledge that this is not a new conversation, and there is much fatigue in constantly having the same conversations. But, it’s important to hold on, as there is much work to be done.

    The questions are below (click the form and scroll). Answer what you wish, as you wish; you can name names, or not. Please try to answer with a paragraph or 2-3 sentences and provide explicit examples where you can. We will publish many of the responses by the end of this year. Thank you for your help!

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    Dominic-Madori Davis

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  • Elon Musk must close Twitter deal by end of this week or face trial | CNN Business

    Elon Musk must close Twitter deal by end of this week or face trial | CNN Business

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    New York
    CNN Business
     — 

    The clock is ticking for Elon Musk to complete his deal to buy Twitter.

    The billionaire Tesla CEO has until 5 p.m. ET on Friday to close his $44 billion acquisition of Twitter or face a trial that was previously delayed to allow both parties to close the deal.

    The high-stakes countdown comes after a months-long battle over an acquisition that would put the world’s richest man in charge of one of the world’s most influential social media platforms, with vast potential impacts on the company’s employees, users and for online discourse generally.

    Musk in April agreed to buy Twitter

    (TWTR)
    for $54.20 per outstanding share and then, weeks later, sought to terminate the deal. He initially cited concerns over the prevalence of bots on the platform and later added claims from a company whistleblower. Twitter

    (TWTR)
    sued him to follow through with the acquisition.

    The two sides had been in the midst of a contentious litigation process preparing for trial to begin on Oct. 17 when Musk told Twitter he wanted to move forward with closing the deal at the originally agreed upon price. The judge overseeing the case, Delaware Chancery Court Chancellor Kathaleen St. Jude McCormick, gave the two sides until Oct. 28 to close the deal or face a November trial.

    In the weeks since the litigation was paused, Twitter has appeared to continue to take steps toward closing the deal. Bloomberg last week reported that the company had frozen employees’ stock accounts in anticipation of the deal’s closing, and that lawyers for both Musk and Twitter were preparing paperwork to close the deal. Musk, meanwhile, told Tesla shareholders that he was “excited” about Twitter even as he admitted to “obviously overpaying” for it.

    But there have been questions about whether the financing Musk had originally lined up to help fund the deal would come through as expected after he spent months disparaging the company and the overall market, including for social media stocks, has declined. Musk has turned to a mix of debt and equity financing for the deal, in addition to putting up his own money, much of it likely from sales of his Tesla shares.

    Some experts have suggested that Musk may need to sell billions of dollars worth of additional Tesla

    (TSLA)
    shares to fund the deal, a move that became easier for the CEO after the company reported quarterly earnings last week – not to mention more costly following a recent decline in the car maker’s share price.

    With days to go before the deadline, there have also been some last-minute jitters among Twitter investors and employees.

    Twitter shares briefly dipped Friday morning following a Bloomberg report that Biden administration officials were in early discussions about possibly subjecting some of Musk’s ventures to national security reviews, including the planned Twitter takeover.

    However, asked by CNN, the administration pushed back on the report, which cited people familiar with the matter. “We do not know of any such conversations,” National Security Council Spokesperson Adrienne Watson said in a statement. Mergers and acquisitions experts have said that while such a review could complicate matters, it likely wouldn’t allow Musk to get out of the acquisition deal.

    Separately, Twitter was forced to address concerns among its employees about the fate of their jobs after The Washington Post reported on Thursday that Musk told prospective investors in the deal that he planned to get rid of nearly 75% of the company’s staff. (Representatives for Musk did not respond to a request for comment on the report, which cited internal documents and unnamed people familiar with the matter.)

    Following the report, Twitter General Counsel Sean Edgett sent a memo to staff saying the company does “not have any confirmation of the buyer’s plans following close and recommend not following rumors or leaked documents but rather wait for facts from us and the buyer directly,” according to a report from Bloomberg. A Twitter spokesperson confirmed to CNN the authenticity of the memo.

    Musk previously discussed dramatically reducing Twitter’s workforce in personal text messages with friends about the deal, which were revealed in court filings, and didn’t dismiss the potential for layoffs in a call with Twitter employees in June.

    Despite his reported plans to gut the staff, and his own remarks that he is overpaying for the company, Musk has tried to sound optimistic about Twitter’s potential.

    “The long-term potential for Twitter, in my view, is an order of magnitude greater than its current value,” he said on the Tesla conference call last week. He has floated several possible product updates and suggested Twitter will become part of an “everything” app called x, possibly in the style of popular Chinese app WeChat.

    But the most immediate change for users, if the deal goes through, could be limiting Twitter’s content moderation and restoring accounts that were previously banned from the platform, most notably that of former President Donald Trump.

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  • WeTravel books $27M to build fintech and more for bespoke group travel

    WeTravel books $27M to build fintech and more for bespoke group travel

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    Travel is back on the radar for investment, with consumers and business users both on the move again after a long pandemic period of staying in one place. Today, a startup called WeTravel — which builds tech for the specific needs of group travel — has raised $27 million, money that it will be using to expand its business on the heels of strong growth in the last year.

    The company provides payments and other tools to some 3,000 companies, working out to 500,000 customers using its platform. Transaction volumes have grown 30% and revenues currently sitting at 3X the level it was pre-Covid. And CEO and co-founder Johannes Koeppel said he believes those figures will double again in 2023 “as a conservative estimate.”

    The Series B is being led by Left Lane Capital, with previous backers Swift Ventures and Base10 also participating alongside angel investors that include Victor Jacobsson, one of the co-founders of Klarna.

    WeTravel had previously raised only $7 million in the 8 years since it was founded. We understand from sources that this Series B was made at a valuation of a little over $100 million.

    The startup, fittingly, has done a little traveling of its own. Originally, Keoppel and his two co-founders Garib Mehdiyev (CTO), and Zaky Prabowo (CMO) had moved out from The Netherlands to the Bay Area to start the business, only to find it impossible to navigate the visa waters to bring engineers and other technical talent over, too. So in 2019, WeTravel’s three founders relocated back across the pond to The Netherlands. Covid put paid to the idea that a startup needs to have its team in one place, and today, the majority of the company’s business team and customers are in the U.S., and it’s incorporated there, while the three founders, as well as WeTravel’s product and engineering teams, are all in Amsterdam.

    The gap in the market WeTravel is going after is one that seems to have been created, ironically, with the growth of online travel services.

    In the old, pre-internet days, travel agents ruled the roost when it came to booking tickets and overall vacations for many consumers and businesses, both as individuals and groups. Online tools have changed the game for individuals, but interestingly the same doesn’t apply to groups that want to, say, book a multi-day trip or retreat that might involve several hotels, activities, and food, which can involve multiple people, multiple locations, potentially hundreds of suppliers (not just hotels and airlines, but restaurants, excursion operators, insurance providers and much more), and the need for flexible paying options — different people paying different amounts, payments in installments, and lump sum payments that in turn need to be itemized across different suppliers.

    “The important piece is not so much about paying but what happens afterwards,” Keoppel said, “what the travel company has to do with these funds. A typical trip might cost $10 to the user, with the vast majority of that going to suppliers. It becomes about fund management. And more involved the trip, the larger the amount of suppliers from restaurants and transport companies to airlines and hotels and more.” On top of that there are wire fees and different payment methods business to business, country to country.

    WeTravel’s platform covers two main parts of that process: helping those putting the group travel together to organize suppliers and plan everything; and then handling the different aspects of the payment process, whether that involves setting up payments in installments, or working with various currencies and payment methods, and paying out to different suppliers under their individual terms.

    Keoppel describes the fintech side of the business as “the PayPal for travel” and says that it’s complex enough that companies like PayPal, Stripe and other big names in online payments haven’t really been able to address the particular segment of the market that WeTravel is serving, especially when used in tandem with the first part of its product set to coordinate itineraries and suppliers.

    Keoppel believes this is a template we might be seeing more in the B2B fintech world. “My belief is that there will be in the next couple of years more specific SaaS platforms that integrate payments as component for specific industries,” he said. (Indeed, today you already have some addressing this for, say, beauty and wellness, with companies like Fresha, Boulevard and Style Seat building tools specifically for the needs of that vertical.)

    This is also something that WeTravel’s customers also have sometimes tried but failed to build themselves. As travel agents have become “travel advisors” and focus on these bespoke travel experiences, some have turned, he said, to “custom-made systems they build themselves, but what I’ve realized is that what is lacking is the end customer experience. They don’t have the time to build the beautiful invoicing system plus payment methods, and all of the rest.”

    One thing that WeTravel does not currently do is offer discovery to its users — that is, travel advisors might still turn to their little black books, or these days maybe TripAdvisor, Yelp, or other recommendation and discovery platforms, to find interesting restaurants and more. This is something that WeTravel could potentially move into as it grows.

    `One significant elephant in the room is what happens when other big travel platforms consider how they might do more in this area: they already have all the big supplier relationships and it might be a matter of building or buying tools to meet this use case.

    Vinny Pujji, who led the investment for Left Lane, recalled that his parents once ran a travel agency, “so this was a cool one for me to see,” he said. “You bump into sneaky big markets and this is absolutely one of them.”

    He noted that the Covid winter that descended on travel does appear to be thawing, even in the current economic climate.

    “The data tells us that travel is mostly back now,” he said. He points out thought that the company has grown 3x since 2019, underscoring that WeTravel in particular might have proven the axiom if a startup can make it through the pandemic, it can make it full stop. “Church groups, students, there are more stable revenue streams here than just destination bachelor parties.”

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    Ingrid Lunden

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  • Endangered whale’s decline slows, but population falls again

    Endangered whale’s decline slows, but population falls again

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    PORTLAND, Maine — The decline of an endangered species of whale slowed last year, as it lost about 2% of its population, but scientists warn the animal still faces existential threats and is losing breeding females too fast.

    The North Atlantic right whale’s population was more than 480 in 2010 and fell by more than 25% over the following decade. The North Atlantic Right Whale Consortium, a group of scientists, government officials and industry members, said Monday that the population fell to an estimated 340 last year.

    That is a decline of eight animals from the previous year, when the population was initially thought to be even fewer. The whales are vulnerable to ship collisions and entanglement in commercial fishing gear, and they have suffered from poor reproduction and high mortality in recent years.

    “The reality is we are still seeing unsustainable levels of human impacts on the species,” said Heather Pettis, research scientist in the New England Aquarium’s Anderson Cabot Center for Ocean Life and executive administrator of the North Atlantic Right Whale Consortium. “We’re still injuring these animals to a point where it’s not just about survival. It’s about health, it’s about reproduction.”

    The right whales live off the East Coast and migrate every year from calving grounds off Georgia and Florida to feeding grounds off New England and Canada. They were once abundant but were decimated during the commercial whaling era, when they were hunted for their oil and meat.

    The whales have been listed as endangered under the Endangered Species Act more than 50 years but have been slow to recover. The population was even lower in 1990, when it was 264, Pettis said. One of the biggest challenges facing the right whales today is that the number of female whales that are capable of breeding appears to be falling.

    An article that appeared this month in the scientific journal Frontiers in Marine Science reported that the estimated population of female right whales fell from 185 in 2014 to 142 in 2018. The largest decline was seen in breeding females, and only 72 were estimated to be alive at the beginning of 2018, the article said.

    The whales appear to be getting smaller, and that is hurting their ability to reproduce, Peter Corkeron, chair of the Kraus Marine Mammal Conservation Program at the Cabot Center and one of the authors of the article.

    “The world needs more fat whales,” Corkeron said.

    The plight of the right whale has emerged as a major issue for commercial fisheries in the U.S., especially the American lobster industry, which is based mostly in Maine. The whales are particularly vulnerable to becoming entangled in the kind of fixed vertical underwater lines used to fish for lobsters and crabs.

    The federal government has crafted new restrictions on lobster fishing in an effort to save the right whale, and fishermen have argued that the rules could put them out of business. A group of lobster fishermen sued to stop the rules, and their case is pending before the U.S. Court of Appeals for the District of Columbia Circuit.

    Warming oceans are also a concern. The whales are aided by a network of protected zones designed to allow them to eat the tiny organisms they feed on without danger of entanglements and collisions. However, warming waters have caused their food to move, and they have followed it into unprotected areas where they are more vulnerable, scientists have said.

    Conservation groups have advocated for vessel speed restrictions and stricter fishing regulations to save the whales.

    “These latest population numbers confirm that the species continues to teeter on the verge of functional extinction, and current measures to save it are falling short,” said Sarah Sharp, a veterinarian with International Fund for Animal Welfare. “Nevertheless, there is hope on the horizon. Solutions do indeed exist.”

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  • The Logitech G Cloud and Shadow are a match made in cloud gaming heaven

    The Logitech G Cloud and Shadow are a match made in cloud gaming heaven

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    It’s time to accept that cloud gaming is the future of gaming. At least for some people and even though Stadia failed. But that group of people is becoming larger every year.

    For the past few weeks, I have been playing video games on a brand new device — the Logitech G Cloud. But my games weren’t actually running on Logitech’s gaming handheld. Instead, I relied on cloud computing service Shadow to run those games.

    And I have to say that this experience has completely changed how I feel about cloud gaming. Playing on the Logitech G Cloud with Shadow has been mostly a smooth experience. More importantly, I’ve had a ton of fun in the process.

    Image Credits: Romain Dillet / TechCrunch

    An Android console designed for cloud gaming

    But first, what is the Logitech G Cloud? While you may be familiar with the Nintendo Switch and the Steam Deck, you may have never heard of the Logitech G Cloud.

    As you can see in the photos, Logitech’s device looks familiar if you own a Nintendo Switch a Steam Deck. It is essentially a 7-inch display surrounded by gamepad-like controls on each side of the display.

    But the comparison stops here as the Logitech G Cloud isn’t designed to run games natively. It runs Android apps and has mid-range specifications at best. Instead, the device has been created as a thin client to access cloud gaming services.

    That’s why it’s interesting to see that many gamers are just missing the point. For instance, this YouTube video titled “The G Stands For Garbage” mostly mentions emulation performance and Android games.

    Logitech is a peripheral manufacturer. And the Logitech G Cloud should be considered as such. A peripheral for cloud gaming services. A controller with a display. A physical extension of a server in a data center near you.

    Image Credits: Romain Dillet / TechCrunch

    Now that we have defined the expectations more clearly, I can safely say that Logitech delivers nicely on its original premise. The device feels great in your hand thanks to textured, rounded grips. It feels sturdy but it’s not too heavy.

    In my experience playing Marvel’s Spider-Man Remastered, Rocket League, Hitman 3 or Celeste, the buttons work well. Logitech has chosen the Xbox gamepad layout with A/B/X/Y buttons, two analog joysticks, two analog triggers, two bumper buttons and haptic feedback. There are a handful of extra buttons to get back home or launch the Xbox overlay menu when you’re playing a game on Xbox Cloud Gaming.

    The Logitech G Cloud weighs 463g — that’s roughly 30% lighter than the Steam Deck and a bit heavier than a Nintendo Switch with Joy-Con controllers attached. I’ve had long gaming sessions without feeling any issues in my hands or forearms.

    Under the hood, the Logitech G Cloud sports a Qualcomm Snapdragon 720G system on a chip with 4GB of RAM. It has 64GB of storage that you can expand with a microSD card. It supports WiFi 5 and Bluetooth 5.1. There are also a 3.5mm headphone jack, stereo speakers and stereo microphones.

    On paper, you get just the right amount of computing power to run cloud gaming services, but nothing extra. But it’s a shame that Logitech didn’t choose WiFi 6 over WiFi 5 given how crucial latency and internet bandwidth are for cloud gaming.

    The USB-C port also doesn’t support video output, which means that you won’t be able to plug the device to a TV. The built-in display has a 1080p resolution, which is nice, but it doesn’t have a great viewing angle. So you have to be right in front of the device.

    All of this is fine and you tend to forget those details when you start playing. But my biggest complaint about the Logitech G Cloud is that it isn’t cheap — it costs $350. There are two ways to think about the pricing issue. Logitech products tend to be on the expensive side and it doesn’t seem too expensive when you compare the device to midrange smartphones. But the Nintendo Switch is cheaper and the Steam Deck is just slightly more expensive.

    The Logitech G Cloud runs Android 11 with a custom launcher that has been co-developed with Tencent. If you only need to go through your list of most recent apps or favorite apps, it works fine. But it’s still rough around the edges, especially in the settings and the notification menus.

    I hope Logitech will ship software updates to improve the launcher. If you accidentally bought the Logitech G Cloud to use it as an Android tablet, you can also disable the custom launcher entirely and get the default Android experience.

    Image Credits: Romain Dillet / TechCrunch

    Running Shadow

    The Logitech G Cloud comes with a few pre-installed gaming apps, such as Xbox Cloud Gaming and Nvidia GeForce Now on the cloud gaming front, Steam Link and the Xbox app for remote play in case you own a gaming PC or an Xbox console already.

    You can also install any app you want from Google Play. For instance, I installed Shadow’s app to access their cloud computing service.

    If you are not familiar with Shadow, the French company has been working on a cloud computing service for gamers. People can pay a monthly subscription fee to access a full-fledged computer in a data center near them. It is a Windows instance, which means you can install whatever you want.

    Shadow starts at $29.99 per month for a machine with the equivalent of an Nvidia GeForce GTX 1080, 12GB of RAM and 256GB of storage.

    On October 26, Shadow is releasing a high-end configuration. For another $14.99 per month (so $44.98 per month in total), subscribers get an AMD EPYC 7543P CPU with 4 cores and 8 threads, 16GB of RAM and a recent GPU, such as an Nvidia GeForce RTX 3070 or the equivalent GPU in Nvidia’s professional GPU lineup, or a professional AMD Radeon GPU based on the RDNA 2 architecture (AMD Radeon Pro V620) — I have an Nvidia RTX A4000.

    I have been trying Shadow’s Power Upgrade configuration and it has been working incredibly well. I played Marvel’s Spider-Man Remastered or Hitman 3 with ultra quality settings without any issue. Loading times have been great and visual quality has been stunning. For instance, I get around 65 frames per second in Spider-Man.

    To be fair, given that I’ve been trying Shadow on the Logitech G Cloud, my games are running in 1080p. Modern GPUs have been designed to run games in 4K, or at least in 1440p resolution. So the Power Upgrade might be an overkill for the Logitech G Cloud.

    By default, Steam automatically starts in Big Picture mode when I open the Shadow app on the Logitech G Cloud. Sure, Big Picture hasn’t been updated in ages. But it works fine to select a game and launch it.

    Other launchers are supported but it’s a bit clunky. You can pinch to zoom and tap with your finger to simulate a mouse click in Windows. I haven’t tried to install Playnite, but that could be an option as well if you want to avoid mouse clicks altogether.

    Shadow automatically detects the Logitech G Cloud as a generic Xbox-style controller — no configuration needed. The only issue is that controller vibrations don’t work, alas.

    At home, I have a stable fiber connection and Shadow’s data center is not too far. It means that I can pick up the Logitech G Cloud, wait 15 seconds or so for Windows to boot up on my Shadow, launch a game and play.

    After just a few minutes, I forget that the game isn’t even running locally. And when I quit the game after a while, that’s when I realize that I’ve had no issue and that cloud gaming was just… gaming.

    I also played various games on Nvidia GeForce Now — Trackmania and Disco Elysium for instance. In that case, the experience is even smoother than with Shadow as you don’t see Windows at all. When you hit play, it starts the game directly. As long as you are playing games that are supported by GeForce Now, the experience is great. But the game library is smaller.

    Finally, I tried Xbox Cloud Gaming with games like Fortnite and Forza Horizon 5. It worked fine, but I found that GeForce Now was more responsive. Moreover, the service is still limited to 720p, which is disappointing.

    When it comes to battery life, the Logitech G Cloud doesn’t have a fan and doesn’t get hot. When you play for an hour and a half, it removes 15 to 20% to your battery. In other words, you don’t have to charge the device every time you put it down. Logitech promises up to 12 hours of cloud game play.

    I tried taking the Logitech G Cloud with me on a work trip. The experience wasn’t as good. The hotel Wi-Fi wasn’t reliable enough for cloud gaming. The office Wi-Fi was alright, but it didn’t feel smooth enough for long gaming sessions. I’m not sure I will be traveling with the device in the future as it doesn’t seem to be designed for these use cases.

    Image Credits: Romain Dillet / TechCrunch

    The early days of cloud gaming

    Cloud gaming is still a relatively niche market. But there are many reasons why I think it is about to change. People think cloud gaming is about playing games on the go. But in my experience, it’s a terrible way to experience cloud gaming.

    The most engaged gamers are arguably those who already own a gaming PC or a recent console. That’s why they are also the early adopters of cloud gaming. But most people play games on their phones. According to market research firm Newzoo, there are 2.8 billion gamers on mobile, 1.4 billion gamers on PC and only 0.9 billion gamers on console.

    The reason why Microsoft, Nvidia and Sony are investing so much money in cloud gaming is because it represents an important growth opportunity. And they need to find a way to lower to barrier to entry to big gaming-as-a-service titles.

    For instance, Call of Duty: Modern Warfare 2 is one of the biggest release of the end of 2022. Based on gameplay videos, it must have cost a small fortune to produce.

    Activision wants to put this game in the hands of as many gamers as possible. But a gaming PC is expensive and there are still supply chain issues for the PlayStation 5 and Xbox Series X. If Microsoft’s acquisition of Activision Blizzard goes through, you can be sure that Call of Duty: Modern Warfare 2 will be playable on Xbox Cloud Gaming at some point.

    As for the subscription interrogation, yes, cloud gaming requires you to pay a subscription. Sometimes it’s an all-in-one subscription includes a game library (Xbox Cloud Gaming), sometimes it just lets you access the service (GeForce Now). But millions of gamers are already used to paying subscriptions for Xbox Live Gold, Xbox Game Pass or PlayStation Plus.

    Cloud gaming isn’t going to appeal to everyone. It isn’t even going to replace traditional gaming consoles. And yet, in a few years, there could be more playing video games on a cloud gaming service than on a gaming console.

    It’s all about finding the combination that works for you — the right device, the right cloud gaming service and the right internet connection. And using Shadow on the Logitech G Cloud is definitely a compelling setup.

    Image Credits: Romain Dillet / TechCrunch

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    Romain Dillet

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  • Global VC Flourish launches Madica, an Africa-focused program to back pre-seed stage startups

    Global VC Flourish launches Madica, an Africa-focused program to back pre-seed stage startups

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    Access to funding and lack of support systems are some of the greatest challenges faced by startup founders in sub-Saharan Africa. And while venture capital and founder support programs within the continent are growing, a lot still remains to be done to meet the financing, technology and social capital needs of the especially marginalized groups like women founders.

    It is these gaps that continue to inspire the development of new programs like Madica by US-based venture capital firm Flourish Ventures, which hopes to lessen the burdens of building startups.

    Launched today, Madica is a pan-African investment program that aims to offer funding, technology support, and mentorship to underrepresented founders across the continent. The sector-agnostic program targets technology startups in the pre-seed stage, which is where most ideas fail.

    The program has set aside $6 million for investment in up to 30 African startups, each receiving up to $200,000 in exchange for equity, availing the much needed funding. The initial investment phase will run for three years.

    “Although investment is booming on the continent, funds are often disproportionately targeted at a few well-networked entrepreneurs and skewed towards the more prominent tech hubs… Madica is sector-agnostic and intends to double down on providing hands-on support, extensive resources, access to networks and more. This is why in addition to $6 million of investment capital, we have reserved an equal amount for programmatic support,” said Madica’s head, Emmanuel Adegboye.

    “We encourage founders across the continent to apply for our program. We believe Africans have an unmatched entrepreneurial spirit, and one of Madica’s core goals is to ensure a level playing field for every African founder,” he said.

    Madica said it is also keen on reaching underserved markets in the continent, outside the well-established hubs of Egypt, Kenya, Nigeria, and South Africa. This is part of its push to ensure a pan-African reach by supporting local, and women founders.

    To qualify for the program, founders need to be working on their idea full-time, have a minimum viable product, and should have received little or no institutional funding. Application and admission to the program will be on a rolling basis.

    Madica is also partnering with AfriLabs, Pariti, Africa Early Stage Investor Summit, CELO foundation, and Rising Tide to identify entrepreneurs to support.

    Participating founders will be matched with mentors including Isis Nyong’o, the Asphalt & Ink partner; Ceviant Finance co-founder, Idris Saliu, and Wendy Hoffman, the Capital Legal Counsel at The Delta.

    “Madica is an investment in the African venture ecosystem, with the audacious goal of creating a broader systemic shift. Through Madica, we intend to develop a cadre of mentors, create world-class programming, crowd-in follow-on capital and leverage Flourish’s global presence to extend the reach of local networks. These will eventually benefit other participants in the ecosystem – startups, investors, and policymakers,” said Ameya Upadhyay, the venture partner at Flourish Ventures, an early-stage fintech VC whose portfolio includes Nigeria’s Flutterwave and Paga.

    “We hope that Madica can help change the narrative around African startups – lower the perception of risk, attract more capital, inspire more founders, and garner more media attention,” said Upadhyay.

     

     

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    Annie Njanja

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  • Africa’s tech talent accelerators attract students, VC funding as Big Tech comes calling

    Africa’s tech talent accelerators attract students, VC funding as Big Tech comes calling

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    Tech giants are increasingly looking for tech talent in Africa, where the number of developers reached 716,000 last year, up 3.8% from 2020, according to Google.

    In the last six months, Microsoft and Amazon have been on a recruitment drive that came along with enticing offers including relocation to their hubs in the U.S. and Europe, endearing themselves to the small but growing talent pool amid tough competition from other tech giants like Google, as well as startups.

    This demand for African developers is expected to continue, buoyed by the effects of the Great Resignation, which led employers to search for new talent elsewhere, and as tech behemoths like Google, Oracle and Visa expand their operations in Africa.

    Yet as demand rises, the number of new developers entering the market is disproportionately small, mainly because traditional education institutions in most African countries have been slow to revamp their courses to keep up with job market demands and the fast-evolving world of technology.

    On the other hand, the gap between demand and supply has unequivocally steered the launch of new developer schools and propelled the growth of existing ones in recent months, many of which are gaining the attention of global venture capitalists.

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    Annie Njanja

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  • Why Q3’s median valuations actually make perfect sense

    Why Q3’s median valuations actually make perfect sense

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    Valuations have been top of mind for the entire venture industry this year as many VCs try to navigate their overvalued portfolios and founders scramble to conserve cash and grow into their lofty valuations.

    So one might have predicted that valuations would fall off a cliff this year. But that hasn’t happened because venture investing just isn’t that simple.

    First, let’s look at the numbers: According to PitchBook data, the median seed deal pre-money valuation in the United States was $10.5 million, up from $9 million last year. The median early-stage valuation through the third quarter of this year was $55 million, up from $44 million last year. The median late-stage valuation was $91 million, down from $100 million in 2021.

    It might seem silly that valuations are continuing to climb for some stages — especially after investors made it seem like they were crazy for coming in at last year’s prices, and, of course, in some ways, it is — but it also makes a lot of sense.

    Kyle Stanford, a senior venture capital analyst at PitchBook, told TechCrunch that for one, we can’t forget about those record levels of dry powder.

    “There has been such growth over the past few years of the multistage investors or Andreessen [Horowitz] and Sequoia that have billion-dollar funds investing in early stage,” Stanford said. “The amount of capital that is still available for early stage is still really high and a lot of investors are still willing to put top dollars into deals.”

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    Rebecca Szkutak

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  • Post-Disrupt notes

    Post-Disrupt notes

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    Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann

    Hellooo! I am writing this newsletter on the plane back to my home in Austin after being at Disrupt in San Francisco this week. It was my first IRL Disrupt, and even though I am on the team and was aware of all the planning and preparation behind the scenes, I was still blown away by how incredibly professional and well done it was. We had about 10,000 attendees, tons of great panels and speakers, engaged audiences and the super exciting Battlefield competition, among other things.

    But I am tired, so be warned this newsletter may be a bit abbreviated. 🙂

    I had the honor of kicking off the entire show recording the Equity podcast LIVE with Alex Wilhelm and Natasha Mascarenhas, where we shared some interesting new news about Domm Holland, co-founder of the now-defunct, one-click checkout startup Fast. We had an absolute blast recording in person instead of looking at each other on Zoom. Thanks to all who attended so early that morning!

    Then on Wednesday, I moderated a panel titled “How to compete without losing your mind and runway.” Ramp CEO Eric Glyman and Airbase founder Thejo Kote were good sports and joined the amazing Ruth Foxe Blader of Anthemis to talk about what it’s like competing in this current environment. Despite being competitors in the spend management space, Eric and Thejo kept it chill and no fights broke out onstage. Meanwhile, Ruth shared some insight from the investor side. I’ll have a story with more details about what they discussed that will publish sometime in the next couple of weeks.

    Also on Wednesday, I moderated a fireside chat with Brex co-CEO and co-founder Henrique Dubugras and YC continuity managing director (and early Brex investor) Anu Hariharan. It was standing room only and Dubugras spoke candidly on a number of topics such as just how much the company spent on that billboard campaign, what really led to its decision to stop working with SMBs and the lessons learned after that decision caused a bit of an uproar in the startup community. He also revealed some new customers for the company’s Empower software product: Coinbase, SeatGeek, SuperHuman, ScaleAi and Medical Genomics. Again, I’ll be writing up a story with more details about what we discussed that will publish sometime in the next couple of weeks.

    And finally, on Thursday, I interviewed Rippling CEO and co-founder Parker Conrad. He discussed what he describes as “the biggest launch” of his career — the company’s new global payroll product, which he is not shy about saying will directly compete with the likes of Deel. You can read more about that here. He also discussed some takeaways from his experience at Zenefits, saying that he was taking compliance “very seriously” at his new company. Rippling’s move into the payroll space comes about one month after it announced an expansion into spend management, which puts it in direct competition with the likes of Brex, Ramp, Airbase, TripActions and many others in the space.

    Image Credits: TechCrunch

    Weekly News

    As the Fintech Fund’s Nik Milanović (who also spoke at Disrupt about community) noted in this tweet, “The @plaid team has been busy in the last week:

    • Faster digital onboarding
    • More fraud controls
    • Privacy Controls suite
    • Crypto wallet onboard

    Meanwhile, payments infrastructure provider Finix revealed another way it’s going head-to-head with Stripe. In a blog post, the startup said: “Finix is further expanding its In-Person Payment offerings, rolling out more software development kits and APIs to pair with a suite of point-of-sale payment terminals from multiple manufacturers. The best part? Only a single integration is required.”

    As reported by TC’s Catherine Shu: Cross-border payments startup Thunes is partnering with Visa in a move that will add more than 1.5 billion new endpoints to Visa Direct’s digital payments network. This enables many more consumers and small businesses to send funds to markets in Africa, Asia and Latin America, where digital wallets are often the default payment methods.

    Fellow fintech enthusiast and newsletter writer Marcel van Oost is launching a new fintech community. You can learn more here.

    Finally, Cardless and Simon® Launch Premium Retail Credit Card on American Express Network.

    Fundings and M&A

    Landis grabs $40M to turn renters into homeowners

    Enable lands $94M to help B2B companies manage their rebate programs

    Achieve aims to fuel digital personal finance transformation with new $225M in fully committed debt capital

    Bookkeep raises $6.6M in seed funding

    Mexican buy now, pay later app Nelo lands $100M credit line

    Capital on Tap Gets $110M Credit Facility to Build Central Finance Hub

    Well, I had a wonderful time at Disrupt meeting my wonderful colleagues (we genuinely respect and like each other!) and so many of you. Already looking forward to next year. Oh, and a heads-up that I’ll be out all of next week, taking a much needed break, so you won’t be getting the Interchange in your inbox on October 30. But I’ll be back the following week! That’s it for this week. See you again in two weeks! Until then, take good care. — xoxoxo, Mary Ann

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    Mary Ann Azevedo

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  • Best ways to charge your phone’s battery

    Best ways to charge your phone’s battery

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    We spend so much money on tech that it’s incredibly frustrating when our devices break. A little prevention can go a long way. Here are six checkups to give your tech now to avoid a shocking repair bill later. 

    Regular maintenance is key to longevity. Tap or click for my simple action plan to get more years out of your iPhone or Android. 

    Then there are the mistakes you make day in and day out. Bad charging habits can shorten or disrupt your smartphone battery life if you aren’t careful. 

    Hang onto your phone number. (iStock)

    Don’t rely on knock-off chargers 

    High-quality chargers have circuits inside of them that switch off when there’s too much power draw. This protects your phone battery from overcharging, breaking, or overheating your phone. 

    ARE YOU ‘ADDICTED’ TO YOUR SMARTPHONE?

    Heat is your battery’s biggest enemy. Some cheap chargers and cables have even led to fire and injuries. Saving money is great, but don’t skimp on quality here. 

    Here’s a list of safe options that will charge your phone safely. 

    Be careful with power banks 

    Just like with cheap chargers, cheap power banks can ruin your battery over time. Be sure any power bank you use has overcharge protection. If not, you can still use it, but keep an eye out. Once your battery is almost full, unplug it. 

    It would be best if you also avoided power banks with quick charge options unless they’re from a reliable brand. Here’s a rule of thumb: If you’ve never heard of it, say no. 

    Rapid charging can send too much electricity to your phone and cause battery damage. This high voltage could, at the very least, shorten your battery lifespan. 

    Online predators can save, screenshot or screen-record public content of children on social media without consequence.

    Online predators can save, screenshot or screen-record public content of children on social media without consequence.
    (AP Photo/Jenny Kane, File)

    Tap or click for more smart ways to ensure you’re buying gear worth your money. 

    Don’t download battery-draining apps 

    Lithium-ion and lithium-polymer phone batteries only have a limited number of charging cycles before they degrade. This is why most people encounter battery problems after two years of use. 

    There’s nothing you can do about your battery wearing down eventually, but some things have more of an impact. If you have performance apps that monitor your battery life, they could harm it in the long run. These apps constantly use power to monitor your battery life. 

    Spyware, adware, and other malware are also taxing on phones. Most constantly run in the background. Tap or click here for signs your phone is infected. 

    Don’t use your phone while it’s charging 

    TECH TIP: WHAT REALLY HAPPENS WHEN YOU UNSEND A TEXT ON YOUR IPHONE

    Your phone is at 1%, so you plug it in. Leave it alone! Using your phone while charging can rapidly increase the temperature, putting strain on your battery, screen and processor. 

    Charging rules are essential when it comes to your computer, too. Tap or click for steps to check your laptop’s battery health. 

    Take it out of the case 

    Phone cases can be a great way to customize your phone and add some physical security. When it comes to charging, though, they can cause temperature problems. 

    When your phone battery heats up too much, it can cause damage to the rest of your phone. To be safe, take the case off while you charge — especially if you notice your phone heats up while it’s plugged in. 

    The iPhone 14, iPhone 14 Pro and iPhone 14 Pro Max are displayed at the Apple Fifth Avenue store, in New York City Sept. 16, 2022. 

    The iPhone 14, iPhone 14 Pro and iPhone 14 Pro Max are displayed at the Apple Fifth Avenue store, in New York City Sept. 16, 2022. 
    (Reuters/Andrew Kelly)

    Keep your tech-know going  

    My popular podcast is called “Kim Komando Today.” It’s a solid 30 minutes of tech news, tips and callers with tech questions like you from all over the country. Search for it wherever you get your podcasts. For your convenience, hit the link below for a recent episode. 

    PODCAST PICK: Best iOS 16 features, email tracking, WhatsApp privacy update 

    Here are all the new iOS 16 features you didn’t know about. Plus, how to make strangers read your emails, secret AR setting in Google Maps, WhatsApp may soon let you hide your online status, what happens to your Google account when you die and how to stop email tracking. 

    Check out my podcast “Kim Komando Today” on Apple, Google Podcasts, Spotify, or your favorite podcast player. 

    CLICK HERE TO DOWNLOAD THE FOX NEWS APP

    Listen to the podcast here or wherever you get your podcasts. Just search for my last name, “Komando.” 

    What digital lifestyle questions do you have? Call Kim’s national radio show and tap or click here to find it on your local radio station. You can listen to or watch The Kim Komando Show on your phone, tablet, television, or computer. Or tap or click here for Kim’s free podcasts. 

    Copyright 2023, WestStar Multimedia Entertainment. All rights reserved. By clicking the shopping links, you’re supporting my research. As an Amazon Associate, I earn a small commission from qualifying purchases. I only recommend products I believe in. 

    Learn about all the latest technology on The Kim Komando Show, the nation’s largest weekend radio talk show. Kim takes calls and dispenses advice on today’s digital lifestyle, from smartphones and tablets to online privacy and data hacks. For her daily tips, free newsletters, and more, visit her website at Komando.com. 

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  • Twitter stock falls after report says Biden admin weighing security review of Musk ventures | CNN Business

    Twitter stock falls after report says Biden admin weighing security review of Musk ventures | CNN Business

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    New York
    CNN Business
     — 

    Shares of Twitter dropped as much as 8% in pre-market trading Friday as investors braced for some last-minute uncertainty around Elon Musk’s $44 billion deal to buy the company.

    The stock reaction, which rebounded somewhat later in the morning, followed a Bloomberg report that Biden administration officials are in early discussions about possibly subjecting some of Musk’s ventures to national security reviews, including the planned Twitter

    (TWTR)
    takeover. Asked by CNN, the administration pushed back on the report, which cited people familiar with the matter.

    “We do not know of any such conversations,” National Security Council Spokesperson Adrienne Watson said in a statement. A Treasury spokesperson said that the Committee on Foreign Investment in the United States “does not publicly comment on transactions that it may or may not be reviewing” by law and practice.

    Among the equity investors who committed to provide financing to help Musk fund the deal are several foreign entities, including the Qatar sovereign wealth fund and Saudi Arabian Prince Alwaleed bin Talal, who was already one of Twitter’s largest investors prior to Musk’s proposed takeover.

    In response to a tweet about the Bloomberg report, one user wrote: “It would be hysterical if the government stopped Elon from over paying for Twitter.” Musk responded to that tweet with a “100” emoji, which typically indicates emphatic agreement, and a crying laughing face emoji.

    It’s unclear what, if any, impact the reported security review could have on completing a deal that has already been subject to months of uncertainty. Musk has one week remaining to close the deal or face a rescheduled trial in the Delaware Court of Chancery that could result in him being forced to acquire the social media firm.

    Twitter declined to comment on the report about the possible review; representatives for Musk did not immediately respond to a request for comment.

    By other accounts, the deal appears to be moving toward completion. In a separate report Thursday evening, Bloomberg said that bankers and lawyers for both Twitter and Musk are preparing the paperwork needed to complete the deal. Bloomberg also last week reported that the company had frozen employees’ stock accounts in anticipation of the deal’s completion.

    On a conference call this week to discuss Tesla’s earnings results, Musk said he was “excited” about the Twitter deal, but also admitted that he is “obviously overpaying” for it. “The long-term potential for Twitter, in my view, is an order of magnitude greater than its current value,” he said.

    The Washington Post on Thursday reported that Musk told prospective investors in the deal that he planned to get rid of nearly 75% of the company’s staff, and that Twitter had already planned massive layoffs even if the deal did not go through, citing internal documents and interviews with people familiar with the matter. Neither Twitter nor representatives for Musk responded to requests for comment regarding layoff plans.

    Following the Washington Post report, Twitter General Counsel Sean Edgett sent a memo to staff saying the company does “not have any confirmation of the buyer’s plans following close and recommend not following rumors or leaked documents but rather wait for facts from us and the buyer directly,” according to a report from Bloomberg. A Twitter spokesperson confirmed to CNN the authenticity of the memo.

    Musk had previously discussed dramatically reducing Twitter’s workforce in personal text messages with friends about the deal, which were revealed in court filings, and didn’t dismiss the potential for layoffs in a call with Twitter employees in June.

    – CNN’s Matt Egan contributed to this report.

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  • India’s Wire retracts reports on Meta citing discrepancies

    India’s Wire retracts reports on Meta citing discrepancies

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    Wire has retracted its reports on Meta after discovering “certain discrepancies” in its news pieces, the Indian outlet said Sunday, marking what should be an end to the high-profile drama with the social juggernaut that captured the interest of newsrooms and tech companies globally for two weeks.

    The move follows Wire, a small but gutsy Indian news outlet, setting up an internal review process to evaluate its reporting earlier this week after Meta, the subject of the original story, and the independent sources it relied on vehemently denied the newsroom’s reports.

    “Our investigation, which is ongoing, does not as yet allow us to take a conclusive view about the authenticity and bona fides of the sources with whom a member of our reporting team says he has been in touch over an extended period of time,” Wire said in a statement.

    Wire reported earlier this month that Meta gave the governing party BJP’s top digital operative an unchecked ability to remove content from Instagram and ran a series of follow-ups, asserting Meta was insincere in its public denials of the reporting. In one of the stories, Wire cited what it claimed was an internal email from Meta comms Andy Stone. In another, it cited testimonies from independent security researchers vouching for the authenticity of Stone’s email to Wire. (Both Meta and security researchers have disputed the reports.)

    The Indian news organization said Sunday that “certain discrepancies have emerged in the material used.”

    “These include the inability of our investigators to authenticate both the email purportedly sent from a*****@fb.com as well as the email purportedly received from Ujjwal Kumar (an expert cited in the reporting as having endorsed one of the findings, but who has, in fact, categorically denied sending such an email). As a result, The Wire believes it is appropriate to retract the stories.”

    Pamela Philipose, the ombudsperson at the Wire, reported serious lapse at Wire’s reporting on Saturday. She wrote:

    However The Wire’s story failed certain foundational tests, most patently in its citing of sources. Many of these sources either did not stand by what The Wire put out, or were misunderstood, or were wrongly quoted, or possibly had second thoughts. As they went public on distancing themselves from the investigation, it began to tilt alarmingly like a chair deprived of a couple of its legs.

    Rebuttals, if they are to work, must carry conviction. Despite The Wire’s efforts to iterate and reiterate the dependability of its account, and cite evidence that withstands the scrutiny of peers, things seemed to unravel at a pace that outstripped any effort to correct public perception. The doubts over the authenticity of the Andy Stone email are a case in point as also its lack of due diligent scrutiny into what the powers of the XCheck really are.

    Finally, there were serious mis-steps in the firefighting that The Wire did when contrary evidence piled up.

    Wire says it is working with independent security experts in its ongoing investigation. In the meantime, it appears that it has taken some action against Devesh Kumar, one of its reporters who worked on the story and was key to vouching the sources and the materials they provided.

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    Manish Singh

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  • These artists found out their work was used to train AI. Now they’re furious | CNN Business

    These artists found out their work was used to train AI. Now they’re furious | CNN Business

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    CNN
     — 

    Erin Hanson has spent years developing the vibrant color palette and chunky brushstrokes that define the vivid oil paintings for which she is known. But during a recent interview with her, I showed Hanson my attempts to recreate her style with just a few keystrokes.

    Using Stable Diffusion, a popular and publicly available open-source AI image generation tool, I had plugged in a series of prompts to create images in the style of some of her paintings of California poppies on an ocean cliff and a field of lupin.

    “That one with the purple flowers and the sunset,” she said via Zoom, peering at one of my attempts, “definitely looks like one of my paintings, you know?”

    With Hanson’s guidance, I then tailored another detailed prompt: “Oil painting of crystal light, in the style of Erin Hanson, light and shadows, backlit trees, strong outlines, stained glass, modern impressionist, award-winning, trending on ArtStation, vivid, high-definition, high-resolution.” I fed the prompt to Stable Diffusion; within seconds it produced three images.

    “Oh, wow,” she said as we pored over the results, pointing out how similar the trees in one image looked to the ones in her 2021 painting “Crystalline Maples.” “I would put that on my wall,” she soon added.

    Hanson, who’s based in McMinnville, Oregon, is one of many professional artists whose work was included in the data set used to train Stable Diffusion, which was released in August by London-based Stability AI. She’s one of several artists interviewed by CNN Business who were unhappy to learn that pictures of their work were used without someone informing them, asking for consent, or paying for their use.

    Once available only to a select group of tech insiders, text-to-image AI systems are becoming increasingly popular and powerful. These systems include Stable Diffusion, from a company that recently raised more than $100 million in funding, and DALL-E, from a company that has raised $1 billion to date.

    These tools, which typically offer some free credits before charging, can create all kinds of images with just a few words, including those that are clearly evocative of the works of many, many artists (if not seemingly created by the same artist). Users can invoke those artists with words such as “in the style of” or “by” along with a specific name. And the current uses for these tools can range from personal amusement to more commercial cases.

    In just months, millions of people have flocked to text-to-image AI systems and they are already being used to create experimental films, magazine covers and images to illustrate news stories. An image generated with an AI system called Midjourney recently won an art competition at the Colorado State Fair, and caused an uproar among artists.

    But as artists like Hanson have discovered that their work is being used to train AI, it raises an even more fundamental concern: that their own art is effectively being used to train a computer program that could one day cut into their livelihoods. Anyone who generates images with systems such as Stable Diffusion or DALL-E can then sell them (the specific terms regarding copyright and ownership of these images varies).

    “I don’t want to participate at all in the machine that’s going to cheapen what I do,” said Daniel Danger, an illustrator and print maker who learned a number of his works were used to train Stable Diffusion.

    The machines are far from magic. For one of these systems to ingest your words and spit out an image, it must be trained on mountains of data, which may include billions of images scraped from the internet, paired with written descriptions.

    Some services, including OpenAI’s DALL-E system, don’t disclose the datasets behind their AI systems. But with Stable Diffusion, Stability AI is clear about its origins. Its core dataset was trained on image and text pairs that were curated for their looks from an even more massive cache of images and text from the internet. The full-size dataset, known as LAION-5B was created by the German AI nonprofit LAION, which stands for “large-scale artificial intelligence open network.”

    This practice of scraping images or other content from the internet for dataset training isn’t new, and traditionally falls under what’s known as “fair use” — the legal principle in US copyright law that allows for the use of copyright-protected work in some situations. That’s because those images, many of which may be copyrighted, are being used in a very different way, such as for training a computer to identify cats.

    But datasets are getting larger and larger, and training ever-more-powerful AI systems, including, recently, these generative ones that anyone can use to make remarkable looking images in an instant.

    A piece by illustrator Daniel Danger that was included in the training data behind the Stable Diffusion AI image generator.

    A few tools let anyone search through the LAION-5B dataset, and a growing number of professional artists are discovering their work is part of it. One of these search tools, built by writer and technologist Andy Baio and programmer Simon Willison, stands out. While it can only be used to search a small fraction of Stable Diffusion’s training data (more than 12 million images), its creators analyzed the art imagery within it and determined that, of the top 25 artists whose work was represented, Hanson was one of just three who is still alive. They found 3,854 images of her art included in just their small sampling.

    Stability AI founder and CEO Emad Mostaque told CNN Business via email that art is a tiny fraction of the LAION training data behind Stable Diffusion. “Art makes up much less than 0.1% of the dataset and is only created when deliberately called by the user,” he said.

    But that’s slim comfort to some artists.

    Danger, whose artwork includes posters for bands like Phish and Primus, is one of several professional artists who told CNN Business they worry that AI image generators could threaten their livelihoods.

    He is concerned that the images people produce with AI image generators could replace some of his more “utilitarian” work, which includes media like book covers and illustrations for articles published online.

    “Why are we going to pay an artist $1,000 when we can have 1,000 [images] to pick from for free?” he asked. “People are cheap.”

    Tara McPherson, a Pittsburgh-based artist whose work is featured on toys, clothing and in films such as the Oscar-winning “Juno,” is also concerned about the possibility of losing out on some work to AI. She feels disappointed and “taken advantage of” for having her work included in the dataset behind Stable Diffusion without her knowledge, she said.

    “How easy is this going to be? How elegant is this art going to become?,” she asked. “Right now it’s a little wonky sometimes but this is just getting started.”

    While the concerns are real, the recourse is unclear. Even if AI-generated images have a widespread impact — such as by changing business models — it doesn’t necessarily mean they’re violating artists’ copyrights, according to Zahr Said, a law professor at the University of Washington. And it would be prohibitive to license every single image in a dataset before using it, she said.

    “You can actually feel really sympathetic for artistic communities and want to support them and also be like, there’s no way,” she said. “If we did that, it would essentially be saying machine learning is impossible.”

    McPherson and Danger mused about the possibility of putting watermarks on their work when posting it online to safeguard the images (or at least make them look less appealing). But McPherson said when she’s seen artist friends put watermarks across their images online it “ruins the art, and the joy of people looking at it and finding inspiration in it.”

    If he could, Danger said he would remove his images from datasets used to train AI systems. But removing pictures of an artist’s work from a dataset wouldn’t stop Stable Diffusion from being able to generate images in that artist’s style.

    For starters, the AI model has already been trained. But also, as Mostaque said, specific artistic styles could still be called on by users because of OpenAI’s CLIP model, which was used to train Stable Diffusion to understand connections between words and images.

    Christoph Schuhmann, an LAION founder, said via email that his group thinks that truly enabling opting in and out of datasets will only work if all parts of AI models — of which there can be many — respect those choices.

    “A unilateral approach to consent handling will not suffice in the AI world; we need a cross-industry system to handle that,” he said.

    Partners Mathew Dryhurst and Holly Herndon, Berlin-based artists experimenting with AI in their collaborative work, are working to tackle these challenges. Together with two other collaborators, they have launched Spawning, making tools for artists that they hope will let them better understand and control how their online art is used in datasets.

    In September, Spawning released a search engine that can comb through the LAION-5B dataset, haveibeentrained.com, and in the coming weeks it intends to offer a way for people to opt out or in to datasets used for training. Over the past month or so, Dryhurst said, he’s been meeting with organizations training large AI models. He wants to get them to agree that if Spawning gathers lists of works from artists who don’t want to be included, they’ll honor those requests.

    Dryhurst said Spawning’s goal is to make it clear that consensual data collection benefits everyone. And Mostaque agrees that people should be able to opt out. He told CNN Business that Stability AI is working with numerous groups on ways to “enable more control of database contents by the community” in the future. In a Twitter thread in September, he said Stability is open to contributing to ways that people can opt out of datasets, “such as by supporting Herndon’s work on this with many other projects to come.”

    Tara McPherson's

    “I personally understand the emotions around this as the systems become intelligent enough to understand styles,” he said in an email to CNN Business.

    Schuhmann said LAION is also working with “various groups” to figure out how to let people opt in or out of including their images in training text-to-image AI models. “We take the feelings and concerns of artists very seriously,” Schuhmann said.

    Hanson, for her part, has no problem with her art being used for training AI, but she wants to be paid. If images are sold that were made with the AI systems trained on their work, artists need to be compensated, she said — even if it’s “fractions of pennies.”

    This could be on the horizon. Mostaque said Stability AI is looking into how “creatives can be rewarded from their work,” particularly as Stability AI itself releases AI models, rather than using those built by others. The company will soon announce a plan to get community feedback on “practical ways” to do this, he said.

    Theoretically, I may eventually owe Hanson some money. I’ve run that same “crystal light” prompt on Stable Diffusion many times since we devised it, so many in fact that my laptop is littered with trees in various hues, rainbows of sunlight shining through their branches onto the ground below. It’s almost like having my own bespoke Hanson gallery.

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