The app industry is as hot as ever, with a record 218 billion downloads and $143 billion in global consumer spend in 2020.
Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.
Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.
This week, there was a lot of headline-making app ecosystem news, including Google’s impactful decision to drop its Play Store commissions, an App Store lawsuit over scammy apps with fake ratings, battles over Apple’s App Tracking Transparency and the arrival of a notable new feature on YouTube — a TikTok rival called Shorts.
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Developer sues Apple over lost revenue due to App Store scams
Kosta Eleftheriou, a co-founder of the Fleksy keyboard app, has been raising awareness about App Store scams in recent weeks, after his own app was targeted by copycat subscription scammers leveraging fake ratings and reviews to gain traction. This week, Eleftheriou filed a lawsuit that attempts to hold Apple accountable for his own app’s lost revenue, saying that Apple promises developers a safe and trustworthy marketplace, but then allows these scammers to operate to the detriment of legitimate apps like his own. Though some news articles positioned the case as some sort of antitrust lawsuit, it’s really more focused on scammers and the accountability Apple has for how its App Store operates, which apps are listed and how well it’s managed and policed. Eleftheriou is asking Apple to compensate him for his lost revenue and other damages as a result of Apple’s ill-run app marketplace, as well as what he claims are unfair App Review rejections.
Google Play drops commissions to 15% on some earnings
Google has followed Apple’s lead in reducing commissions for the Google Play store. But in its case, it has dropped commissions from 30% to 15% on developers’ first $1 million in revenue. Apple, by comparison, starts charging 30% once the developer tops $1 million. Google said 99% of developers who sell goods and services through the Play Store will see a 50% reduction in fees. According to App Annie data, very few Google Play developers make more than $1 million — in fact, only 2,035 developers do on Google Play, compared with 3,611 on iOS. To put this in perspective in terms of revenue, developers making up to $1 million in consumer spend only comprised 5% of total Google Play consumer spend in 2020, the firm noted.
Apple’s ATT scores a win in France
Apple fended off an attempt by advertisers in France who wanted to derail the IDFA change in iOS, which will require users’ permission in order to track them. The complaint had attempted to contrast Apple’s ATT (App Tracking Transparency) requirements for third parties with Apple’s own, where its first-party apps are allow to track by default for the purpose of personalizing ads in various Apple apps. France’s competition regulator decided Apple’s plans “don’t appear to be abusive” and said it can’t intervene just because some apps may see a negative impact. But the authority did say it will investigate Apple further to determine if any of its changes are “self-preferencing.”
YouTube launches its TikTok rival in the U.S.
The short-form video experience known as YouTube Shorts first launched in India, where TikTok has been banned, in September. It’s now coming to the U.S. in its first major expansion. The feature, still in beta, offers a very TikTok-like experience both in terms of recording content and viewing. Users can tap to record video segments for up to 60-second long videos, and use a small handful of editing features like text captions, countdown timers and speed controls. Meanwhile, viewing the videos is also presented in a TikTok-like format with vertical feeds of video where you can double-tap to like, duck into comments or tap on hashtags or sounds to participate in trends.
YouTube believes the feature has potential because it’s connected to the larger YouTube ecosystem, including YouTube Music and the main platform itself — you can subscribe to YouTube channels right from Shorts, for example. But Shorts lacks a lot of what makes TikTok successful for the time being, like its numerous AR effects and editing tools, sound sync and its ability for creators to react and respond to other videos through stitches and duets.
Apple will allow the Russian government to pre-install apps on the iPhone starting on April 1, 2021. In accordance with a new law, Apple users will be shown a dialog box at setup that prompts them to install web browsers, antivirus, messenger and email apps. Users can choose to deselect these apps or delete them from the device later.
Report claims Apple may soon deliver standalone iOS security updates. According to code found in the latest iOS 14.5 beta, Apple could be preparing to introduce a way to update older iPhones with critical security updates without requiring users to download new versions of iOS. This could be helpful in patching older devices where users don’t download iOS updates for fear of slowing down their phone.
Apple says the App Store now supports 300K jobs in the U.K., up 10% YoY, as well as 250K jobs in Germany and another 250K in France. The figures were released in response to increased antitrust scrutiny by regulators, as a way to demonstrate the App Store’s contribution to local economies.
App Annie data shows how few Google Play developers will pay the higher 30% commission after the policy change, announced this week. Google says developers’ first $1 million in revenue will be commissioned at 15%, not 30%. This covers the vast majority of the Play Store’s developer base, as only 2,035 developers make $1 million or more.
Google updates its People API, which will replace the Contacts API being deprecated on June 15, 2021. The new API will now support two new endpoints for batch mutates and Contacts searches, the company said.
Google updates its parental controls for Android, Family Link. The updates acknowledge that not all screen time is the same, by allowing parents to set some apps — like those used for virtual school — as “always allowed” and not counting toward daily limits. It also updated reporting to better show where kids were spending time outside of these necessary apps.
Google is now allowing third-party developers to build Tiles for Wear OS smartwatches. Tiles are small, fast-loading experiences that can deliver specific, timely information users need, but can be tapped to open a related app on the watch or phone for a deeper experience.
Facebook’s Mark Zuckerberg said his company has been preparing for the Apple IDFA changes by investing in more commerce products on its own platforms, like Facebook and Instagram Shops. In a Clubhouse session on Thursday, he announced Facebook has 1 million active Shops which are used by 250 million people every month.
Twitter is testing a way for users to watch YouTube videos from within the home timeline directly on iOS devices, instead of being redirected to YouTube. Finally! The test was made possible through YouTube’s iFrame Player API, which Twitter gained access to.
TikTok will no longer allow users to opt out of personalized advertising starting on April 15th. The app alerted users to the change via a notice that appeared on screen at launch. This means uses will see ads based on what they watch and engage with on TikTok.
TikTok may add a group chats feature sometime early this year, according to Reuters. The feature is already a part of the Chinese version of the TikTok app, Douyin, and would make the app more social.
Instagram adds new teen safety tools as competition with TikTok heats up. TikTok has been making its app safer for teens and this week Instagram followed suit — but instead of locking down teens accounts by default, it made it more difficult for adult predators to reach teens on Instagram, through a variety of alerts and blocking features.
Leaked recordings detail conservative donor Rebekah Mercer’s role at right-wing social app Parler, where she joined meetings to rally employees to fight against the shut down of free speech, and other matters, Bloomberg reports.
Facebook is preparing to add an age-gate to Instagram that would allow for a curated, and likely COPPA-compliant, under 13 experience, according to a report from BuzzFeed. TikTok today does the same thing, following its FTC fines. Instagram could be doing the same to ward off any FTC investigation into underage use of its app as well as to better cater to the younger users who are already on Instagram today.
China banned Signal. The encrypted messaging app became unavailable on the mainland on March 16, following a ban of the Signal website the day prior. The app had been one of the few Western social networks that was accessible in China without a VPN.
Telegram is working on an audio experience that allows users to create voice chats in Telegram Channels that you can join either with your personal profile or channel profile. The feature is in beta testing and no official announcement has been made.
Streaming & Entertainment
Clubhouse hires Instagram alum Fadia Kader as its new head of Media Partnerships and Creators. The hire follows that of OWN and Netflix alum Maya Watson to serve as head of Global Marketing, and points to an increased interest in establishing Clubhouse in the world of media. Kader’s background is in music and tech, having led music partnerships at Twitter, and having worked at Def Jam.
Clubhouse promises its accelerator participants either brand deals or $5,000 per month during its three-month program. The company plans to work with around 20 creators to help them produce, book guests and promote their shows on the platform, as well as source brand deals.
Clubhouse is also currently being investigated by France’s privacy watchdog, CNIL, in an attempt to determine whether or not GDPR will apply to the app and how it’s complying with EU rules. Germany’s regulator last month was doing something similar, as it began looking into how the app was protecting the privacy of European users and their contacts.
Premium content, entertainment and streaming have helped drive up the prices of in-app purchases (IAPs). In 2020, the median price for IAPs among the top non-game apps was $5.99, up from $3.99 in 2017. The median price of subscription IAPs alone, meanwhile, has remained flat at $9.99 over the past four years, Sensor Tower found.
AT&T will begin counting HBO Max streams through the app against data limits. The company owns HBO via WarnerMedia and was previously exempting streams from data caps, but says a California net neutrality law will now no longer allow it to do so. AT&T spoke out against a patchwork of state regulations for net neutrality, saying they will create roadblocks to pro-consumer solutions.
U.S. mobile puzzle game spending jumped 30% YoY to $4.6 billion in 2020, per a Sensor Tower report. The pandemic likely contributed to the rise, with top game Candy Crush Saga pulling in $643 million following by Homescapes and Gardenscapes.
Health & Fitness
Apple Maps has been updated with COVID-19 vaccine locations in the U.S. Apple is sourcing data from VaccineFinder, an initiative led by Boston Children’s Hospital, which is also one of the sources Google Maps is using. Apple is allowing healthcare providers, labs and other businesses to submit their information about vaccine locations.
Facebook will label all COVID-19 vaccine posts with a pointer to official, authoritative sources of information across Facebook and Instagram. It also said it will reduce the distribution of content from users who repeatedly violated policies on vaccine misinformation or who shared debunked claims, as well as any claims that fact checkers say are “Missing Context.”
Security & Privacy
Facebook expands support for security keys to mobile users on iOS and Android. The social network has supported the use of security keys, which generate encrypted, one-time security codes, for desktop users since 2017.
California passed new regulations that ban so-called “dark patterns,” or designs used by websites and apps to frustrate or trick users into doing things they wouldn’t normally do — like subscribing to a service they didn’t want or opting-in to sharing their data with the company, for example.
An iPhone app privacy report from cloud storage company pCloud showed how much personal data is being accessed by apps. The apps collecting the most data were Facebook and Instagram, while Klarna and Grubhub tied for second place, followed by Uber and Uber Eats.
Big tech, including Apple and Google, are ramping up their lobbying in U.S. state capitals, reports The WSJ, as a number of bills that could regulate their industries are arriving in state legislatures. One of these is an app store payments bill that is going to be debated in Arizona’s Senate in the next several weeks. If passed, developers would be able to use their own payment systems for in-app purchases instead of Apple’s and Google’s systems. Other legislation is being proposed in states including Maryland and Virginia.
A government-backed consortium of Chinese companies introduced a new method for tracking iPhone users as an alternative to IDFA (paywalled source: FT). The system could be a workaround for Apple’s App Tracking Transparency, as it won’t require user permission. Tencent and ByteDance are reportedly testing the system, known as CAID.
Google finally rolls out iOS privacy labels for Chrome and Google Search. Competitor DuckDuckGo trolled the company for its delay, saying “after months of stalling, Google finally revealed how much personal data they collect in Chrome and the Google app. No wonder they wanted to hide it.” Burn!
Business, Enterprise and Productivity
App Annie partners with Snowflake and introduces a new Salesforce integration. The former allow data teams to access and transform a variety of mobile estimates, both live and continually updated. The new App Annie Intelligence Salesforce Connector, meanwhile, lets App Annie customers build a better pipeline through mobile-metric enriched CRM records.
Google Meet rolls out the tile view on iOS, to be soon followed by Android support. This view allows a user to see more of the people on the video call, even on the small screen. The app also introduced support for live captions in four new languages on mobile (French, German, Portuguese and Spanish, the latter for Spain and Latin America)
Snap acquired a Berlin-based clothing size recommendation engine Fit Analytics that helps online shoppers buy the right sized clothes. Deal terms were undisclosed. The acquisition will see over 100 Fit team members joining Snap as the company pushes into e-commerce.
Riva Health raised $15.5 million in seed (!!) funding to turn your smartphone into a blood pressure monitor, in a round led by Menlo Ventures. The company is co-founded by scientist Tuhin Sinha and Siri and Viv (exited to Samsung) co-founder Dag Kittlaus. The system being developed would have users place their finger over the phone’s camera light, which would then flash, allowing the app to use the light to track the blood pressure reading.
Mobile banking app Kuda raised $25 million led by Valar to become the neobank for all of Africa. The company today offers mobile-first banking services in Nigeria and has doubled its user base from its seed round to now 650,000.
London-based mobile investing app Invstr raised $20 million to pair Robinhood-like commission-free stock trades with digital banking services and educational and learning tools. The app has over 1 million global users.
Investing app Gatsby raised a $10 million Series A for its Robinhood competitor. The app is aimed at younger users, offering commission-free options and stock trading and is aiming to have more than 100K accounts by the end of the year.
Digitail’s app for veterinary surgery practices raised $2.5 million in seed funding, in a round led by byFounders and Gradient Ventures (Google’s AI fund). The company currently has 2,000 vets in 16 countries using its services.
Match Group makes a seven-figure investment in background check nonprofit Garbo. The Tinder parent company plans to integrate its apps with Garbo’s tools, which alert users to background checks of concern to daters like assault or stalking charges, among other things.
Telegram is selling more than $1 billion in debt to investors to fund its operations and pay creditors, with the promises of discounted equity if the company later goes public. The messaging app owes its creditors around $700m by the end of April, The WSJ reported.
A new startup called Swell has a different take on voice conversations than Clubhouse. Instead of real-time conversations, Swell users engage in asynchronous chats where one user posts an audio clip of up to five minutes in length that others can listen to and then respond to with their own recording. These mini-podcasts can be private chats or public conversations. Swell is available as a free download on both iOS and Android.
1v1Me launches its app that lets anyone gamble on their ability to win in a player versus player game. The iOS app is now available in an invite-only mode, with the first invites going to creators who play games like Call of Duty and Fortnite — the first games that will be supported on the betting platform. Users can sign up for early access on the company’s website for the time being, then stalk the company on Twitter for invites.
This clever iOS recipes app, Half Lemons, does that thing you’ve always wanted a recipe app to do: it serves up dish ideas using the ingredients you have at home. To use the app, you take a quick digital inventory of your kitchen in order to customize the app to deliver recipes that are specifically tailored to your own ingredients. You can then save or share the recipes, in addition to making them right away with a screen that stays powered on as you cook. Future versions of the app will help you shop for ingredients and plan meals.
Retrofy your iPhone
Bored with your iOS 14 customizations? Take your iPhone old-school with this super retro iOS 14 icon and wallpaper set featuring over 110 Mac OS ’84 icons and six monochromatic wallpapers. The set has been handcrafted by freelance digital product designer Ben Vessey, who many years ago had created a similar theme for “retrofying” your desktop screen. When he heard about the Shortcuts feature in iOS 14, he got to work to build a version of this retro experience for iPhone. The pack is £3.99, or £79.99 if you want to request five custom icons of your choice in addition.
The union said it has identified seven cases of “failed facial recognition and other identity checks” leading to drivers losing their jobs and licence revocation action by TfL.
When Uber launched the “Real Time ID Check” system in the U.K. in April 2020, it said it would “verify that driver accounts aren’t being used by anyone other than the licensed individuals who have undergone an Enhanced DBS check”. It said then that drivers could “choose whether their selfie is verified by photo-comparison software or by our human reviewers”.
In one misidentification case the ADCU said the driver was dismissed from employment by Uber and his licence was revoked by TfL. The union adds that it was able to assist the member to establish his identity correctly, forcing Uber and TfL to reverse their decisions. But it highlights concerns over the accuracy of the Microsoft facial recognition technology — pointing out that the company suspended the sale of the system to U.S. police forces in the wake of the Black Lives Matter protests of last summer.
Research has shown that facial recognition systems can have an especially high error rate when used to identify people of color — and the ADCU cites a 2018 MIT study that found Microsoft’s system can have an error rate as high as 20% (accuracy was lowest for dark-skinned women).
The union said it’s written to the mayor of London to demand that all TfL private-hire driver licence revocations based on Uber reports using evidence from its Hybrid Real Time Identification systems are immediately reviewed.
Microsoft has been contacted for comment on the call for it to suspend Uber’s licence for its facial recognition tech.
The ADCU said Uber rushed to implement a workforce electronic surveillance and identification system as part of a package of measures implemented to regain its license to operate in the U.K. capital.
Back in 2017, TfL made the shocking decision not to grant Uber a licence renewal — ratcheting up regulatory pressure on its processes and maintaining this hold in 2019 when it again deemed Uber “not fit and proper” to hold a private hire vehicle licence.
Safety and security failures were a key reason cited by TfL for withholding Uber’s licence renewal.
Uber has challenged TfL’s decision in court and it won another appeal against the licence suspension last year — but the renewal granted was for only 18 months (not the full five years). It also came with a laundry list of conditions — so Uber remains under acute pressure to meet TfL’s quality bar.
Now, though, Labor activists are piling pressure on Uber from the other direction too — pointing out that no regulatory standard has been set around the workplace surveillance technology that the ADCU says TfL encouraged Uber to implement. No equalities impact assessment has even been carried out by TfL, it adds.
WIE confirmed to TechCrunch that it’s filing a discrimination claim in the case of one driver, called Imran Raja, who was dismissed after Uber’s Real ID check — and had his licence revoked by TfL.
His licence was subsequently restored — but only after the union challenged the action.
A number of other Uber drivers who were also misidentified by Uber’s facial recognition checks will be appealing TfL’s revocation of their licences via the U.K. courts, per WIE.
A spokeswoman for TfL told us it is not a condition of Uber’s licence renewal that it must implement facial recognition technology — only that Uber must have adequate safety systems in place.
The relevant condition of its provisional licence on “driver identity” states:
ULL shall maintain appropriate systems, processes and procedures to confirm that a driver using the app is an individual licensed by TfL and permitted by ULL to use the app.
We’ve also asked TfL and the U.K.’s Information Commissioner’s Office for a copy of the data protection impact assessment Uber says was carried before the Real-Time ID Check was launched — and will update this report if we get it.
Uber, meanwhile, disputes the union’s assertion that its use of facial recognition technology for driver identity checks risks automating discrimination because it says it has a system of manual (human) review in place that’s intended to prevent failures.
Albeit it accepts that that system clearly failed in the case of Raja — who only got his Uber account back (and an apology) after the union’s intervention.
Uber said its Real-Time ID system involves an automated “picture matching” check on a selfie that the driver must provide at the point of log in, with the system comparing that selfie with a (single) photo of them held on file.
If there’s no machine match, the system sends the query to a three-person human review panel to conduct a manual check. Uber said checks will be sent to a second human panel if the first can’t agree.
In a statement the tech giant told us:
Our Real-Time ID Check is designed to protect the safety and security of everyone who uses the app by ensuring the correct driver or courier is using their account. The two situations raised do not reflect flawed technology — in fact one of the situations was a confirmed violation of our anti-fraud policies and the other was a human error.
“While no tech or process is perfect and there is always room for improvement, we believe the technology, combined with the thorough process in place to ensure a minimum of two manual human reviews prior to any decision to remove a driver, is fair and important for the safety of our platform.
In two of the cases referred to by the ADCU, Uber said that in one instance a driver had shown a photo during the Real-Time ID Check instead of taking a selfie as required to carry out the live ID check — hence it argues it was not wrong for the ID check to have failed as the driver was not following the correct protocol.
In the other instance Uber blamed human error on the part of its manual review team(s) who (twice) made an erroneous decision. It said the driver’s appearance had changed and its staff were unable to recognize the face of the (now bearded) man who sent the selfie as the same person in the clean-shaven photo Uber held on file.
Uber was unable to provide details of what happened in the other five identity check failures referred to by the union.
It also declined to specify the ethnicities of the seven drivers the union says were misidentified by its checks.
Asked what measures it’s taking to prevent human errors leading to more misidentifications in the future, Uber declined to provide a response.
Uber said it has a duty to notify TfL when a driver fails an ID check — a step that can lead to the regulator suspending the license, as happened in Raja’s case. So any biases in its identity check process clearly risk having disproportionate impacts on affected individuals’ ability to work.
WIE told us it knows of three TfL licence revocations that relate solely to facial recognition checks.
“We know of more [UberEats] couriers who have been deactivated but no further action since they are not licensed by TfL,” it noted.
TechCrunch also asked Uber how many driver deactivations have been carried out and reported to TfL in which it cited facial recognition in its testimony to the regulator — but again the tech giant declined to answer our questions.
WIE told us it has evidence that facial recognition checks are incorporated into geo-location-based deactivations Uber carries out.
It said that in one case a driver who had their account revoked was given an explanation by Uber relating solely to location but TfL accidentally sent WIE Uber’s witness statement — which it said “included facial recognition evidence”.
That suggests a wider role for facial recognition technology in Uber’s identity checks versus the one the ride-hailing giant gave us when explaining how its Real-Time ID system works. (Again, Uber declined to answer follow-up questions about this or provide any other information beyond its on-the-record statement and related background points.)
But even just focusing on Uber’s Real-Time ID system there’s the question of how much say Uber’s human review staff actually have in the face of machine suggestions combined with the weight of wider business imperatives (like an acute need to demonstrate regulatory compliance on the issue of safety).
James Farrer, the founder of WIE, queries the quality of the human checks Uber has put in place as a backstop for facial recognition technology, which has a known discrimination problem.
“Is Uber just confecting legal plausible deniability of automated decision making or is there meaningful human intervention,” he told TechCrunch. “In all of these cases, the drivers were suspended and told the specialist team would be in touch with them. A week or so typically would go by and they would be permanently deactivated without ever speaking to anyone.”
“There is research out there to show when facial recognition systems flag a mismatch humans have bias to confirm the machine. It takes a brave human being to override the machine. To do so would mean they would need to understand the machine, how it works, its limitations and have the confidence and management support to over rule the machine,” Farrer added. “Uber employees have the risk of Uber’s license to operate in London to consider on one hand and what… on the other? Drivers have no rights and there are in excess so expendable.”
He also pointed out that Uber has previously said in court that it errs on the side of customer complaints rather than give the driver benefit of the doubt. “With that in mind can we really trust Uber to make a balanced decision with facial recognition?” he asked.
Farrer further questioned why Uber and TfL don’t show drivers the evidence that’s being relied upon to deactivate their accounts — to given them a chance to challenge it via an appeal on the actual substance of the decision.
“IMHO this all comes down to tech governance,” he added. “I don’t doubt that Microsoft facial recognition is a powerful and mostly accurate tool. But the governance of this tech must be intelligent and responsible. Microsoft are smart enough themselves to acknowledge this as a limitation.
“The prospect of Uber pressured into surveillance tech as a price of keeping their licence… and a 94% BAME workforce with no worker rights protection from unfair dismissal is a recipe for disaster!”
The latest pressure on Uber’s business processes follows hard on the heels of a major win for Farrer and other former Uber drivers and labor rights activists after years of litigation over the company’s bogus claim that drivers are “self employed”, rather than workers under U.K. law.
However, the litigants immediately pointed out that Uber’s “deal” ignored the Supreme Court’s assertion that working time should be calculated when a driver logs onto the Uber app. Instead Uber said it would calculate working time entitlements when a driver accepts a job — meaning it’s still trying to avoid paying drivers for time spent waiting for a fare.
The ADCU therefore estimates that Uber’s “offer” underpays drivers by between 40%-50% of what they are legally entitled to — and has said it will continue its legal fight to get a fair deal for Uber drivers.
At an EU level, where regional lawmakers are looking at how to improve conditions for gig workers, the tech giant is now pushing for an employment law carve out for platform work — and has been accused of trying to lower legal standards for workers.
In additional Uber-related news this month, a court in the Netherlands ordered the company to hand over more of the data it holds on drivers, following another ADCU+WIE challenge. Although the court rejected the majority of the drivers’ requests for more data. But notably it did not object to drivers seeking to use data rights established under EU law to obtain information collectively to further their ability to collectively bargain against a platform — paving the way for more (and more carefully worded) challenges as Farrer spins up his data trust for workers.
The applicants also sought to probe Uber’s use of algorithms for fraud-based driver terminations under an article of EU data protection law that provides for a right not to be subject to solely automated decisions in instances where there is a legal or significant effect. In that case the court accepted Uber’s explanation at face value that fraud-related terminations had been investigated by a human team — and that the decisions to terminate involved meaningful human decisions.
But the issue of meaningful human invention/oversight of platforms’ algorithmic suggestions/decisions is shaping up to be a key battleground in the fight to regulate the human impacts of and societal imbalances flowing from powerful platforms which have both god-like view of users’ data and an allergy to complete transparency.
The latest challenge to Uber’s use of facial recognition-linked terminations shows that interrogation of the limits and legality of its automated decisions is far from over — really, this work is just getting started.
Uber’s use of geolocation for driver suspensions is also facing legal challenge.
While pan-EU legislation now being negotiated by the bloc’s institutions also aims to increase platform transparency requirements — with the prospect of added layers of regulatory oversight and even algorithmic audits coming down the pipe for platforms in the near future.
Last week the same Amsterdam court that ruled on the Uber cases also ordered India-based ride-hailing company Ola to disclose data about its facial-recognition-based “Guardian” system — aka its equivalent to Uber’s Real-Time ID system. The court said Ola must provide applicants with a wider range of data than it currently does — including disclosing a “fraud probability profile” it maintains on drivers and data within a “Guardian” surveillance system it operates.
Farrer says he’s thus confident that workers will get transparency — “one way or another”. And after years fighting Uber through U.K. courts over its treatment of workers his tenacity in pursuit of rebalancing platform power cannot be in doubt.
The company, which currently offers mobile-first banking services in Nigeria, has picked up $25 million in a Series A being led by Valar Ventures, the firm co-founded and backed by Peter Thiel, with Target Global and other unnamed investors participating. This is the first time that Valar — which has invested in a number of fintech startups, including N26, TransferWise, Stash and, just in the last week, BlockFi and BitPanda — has backed an African startup.
Kuda currently provides services for consumers to save and spend money, and it has recently introduced overdrafts (essentially revolving credit for individuals). Ogundeyi said in an interview that the plan is to use these new funds to continue expanding its credit offerings, to build out services for businesses, to add in more integrations and to move into more markets.
The funding is coming on the heels of very strong growth for Kuda, which is co-headquartered in London and Lagos.
When we last wrote about the startup, four months ago, it had just closed a seed round of $10 million led by Target Global. That was, at the time — and I think still is — the largest-ever seed round raised by a startup out of Africa, and thus as much of a milestone for the tech industry there as it was for Kuda itself.
At the time of the seed round, Kuda had registered 300,000 customers: now, that figure has more than doubled to 650,000, and tellingly, that base is spending more money through the Kuda app.
“In November we were doing about $500 million in transactions per month,” Ogundeyi said, for services like bill payments, card transactions and phone top-ups. “We closed February at $2.2 billion.”
Kuda, as we described in our profile of the company when covering its seed round, is following in the footsteps of a number of other so-called “neobanks”, building a suite of banking services with a more accessible user interface and a more modern approach: you interact with the bank using a mobile app, and in addition to basic banking services, it provides tools to help people manage their money more intelligently.
But Kuda is also different from many of these, specifically because it taps into some financial practices that are unique to its market.
As Ogundeyi describes it, most people who are employed by companies will have “salary accounts” at banks, where companies pay in a person’s wages on a regular basis. These will typically be at incumbent banks, but they do not offer the same ranges of services to customers. No mobile apps, no facilities to buy mobile top-ups or make other kinds of bill payments, no AI-based calculators to figure out your monthly spend and provide suggestions on how to manage your budget, and so on.
That has opened a gap in the market for others to provide those services in their place. Kuda’s deposits, Ogundeyi said, typically start as basic transfers that people make from those “salary accounts” elsewhere. These start out small, maybe 20% of a person’s wages, but as those users find themselves using Kuda’s payment and other tools more, they are increasing how much they transfer in each payment period.
“As the trust increases you’re naturally more comfortable having money with Kuda,” he said. The next stage from that will be people depositing money directly with Kuda. A small minority already do this, he added, although the startup “has a bit more work to do” to get more companies integrated into its platform. (This is one of the areas that will be developed with this latest round of funding.)
In turn, having more money in Kuda accounts is likely to spur another wave of services being turned on at the startup, such as loans with more competitive interest rates, because they will not just be based on how much money people have but also their spending histories on the platform. “We can offer loans to salaried customers instantly as long as their salary is with Kuda,” he said.
Much of this is being enabled because of how Kuda is built. A lot of challenger banks have tapped into a world of finance and banking APIs built by another wave of fintech startups, partnering with other banks to provide backend deposit and other services: their value-add is in building efficient customer service and tools to help people manage and borrow money in smarter ways.
Kuda, on the other hand, has its own microfinance banking license from the central bank of Nigeria. This means that on top of building those same money management services, Kuda can also issue debit cards (in partnership with Visa and Mastercard), manage payments and transfers, and build all of the services in the stack itself, including those salary account services and loans. (Kuda does have partnerships with incumbent banks, specifically Zenith Bank, Guaranteed Trust and Access Bank, for people to come in for physical deposits and withdrawals when needed.)
While the service is still only live in Nigeria, the “vision is still to serve all Africans in Africa as well as outside of it,” Ogundeyi said.
The first step of that will likely be Nigerians outside of Nigeria — most likely in the U.K., where Kuda already has a headquarters, and where it has a ready market: London alone has been estimated to be home to upwards of 1 million Nigerian immigrants and people of Nigerian descent (the number of U.K. residents actually born in Nigeria is considerably smaller, more like 200,000: that is the diaspora at work).
He added that the startup is also at work on preparing for the next countries on the continent to expand its service, another area where this funding will go: “It will let us fast-track teams, on-the-ground operational teams,” he said.
The bigger picture is that the market for financial services targeting Africans has been on a significant upswing and so we will be seeing a lot more activity coming out of the region, not just from home-grown startups, but also out of other tech companies increasingly doing more business in that part of the world.
Cases in point: In addition to Stripe acquiring Nigerian payments company Paystack last year, just earlier this week, PayPal announced a deal with Flutterwave to bring PayPal services to more merchants in the region — specifically so that PayPal customers can pay merchants in the region using PayPal rails. Square’s CEO, Jack Dorsey, meanwhile, never did make his intended move to the continent — COVID-19 has derailed many plans, as we all know — but it shows that the company is trying not to overlook opportunities there, either.
PayPal, to be clear, has been active in Nigeria since 2014, but partnering with a significant player in the region represents an important step for it: Flutterwave itself earlier this month raised $170 million and became Africa’s latest unicorn, in what is still a pretty small list.
The fact that there is so much more to be done with payments and more financial services leaves the door open wide for Kuda to move in a number of different directions if it chooses. Having customers in two countries, especially with one foot in the developed market and another in an emerging market, for example, gives the company an interesting window into the world of remittances.
Money transfer has been one of the very biggest, and most important financial services for African diasporas — alongside those from many other emerging markets.
Even in cases where people are “unbanked” and have no other financial footprints, they have been turning to remittance services to send money home to their families from abroad. Kuda, with its integrations into people’s salaries, could easily become an efficient, one-stop-shop conduit for that activity too. (That’s one reason, likely, that remittance startup, Remitly, has also moved into starting to offer accounts to its users in originating countries.)
All of this to say that Valar’s making a new kind of bet here, but one laden with possibilities and a differentiated approach compared to the rest of its investment activities.
“Nigeria is at a tipping point in the adoption of digital banking,” noted Andrew McCormack, a general partner and co-founder at Valar, who led its investment here. “With the rapidly growing, youthful population who are open to new financial alternatives, Kuda is well-positioned to benefit and will transform the landscape of African banking. We are excited to lead their Series A and continue on the journey alongside Kuda.”