Inside Tesla’s solar energy astroturfing

Tesla has been masking its lobbying efforts on solar panels and battery storage through the Energy Freedom Coalition of America, a trade association that is little more than a front for the automaker and alternative energy company, public documents suggest.

SolarCity, which Tesla bought in 2016, began the practice of using the EFCA to promote its products and services without acknowledging it was the only significant member of the organization. EFCA was initially portrayed as a solar advocacy group with grassroots support.

When rule changes threatened payments to Arizonans with domestic solar panels in 2016, EFCA knew just what to do. It launched the Arizona Solar Pledge for citizens “to demonstrate their support for energy choice and add their names to the growing coalition determined to protect Arizona rooftop solar customers.”

Anyone signing the petition would “demonstrate to … the broader political community that the people of Arizona stand with rooftop solar and energy choice,” wrote an EFCA spokesperson at the time.

EFCA noted that its list of members included Silevo, SolarCity Corporation, ZEP Solar, Go Solar, 1 Sun Solar Electric, and Ecological Energy Systems.

However, far from being a grassroots environmental advocacy organization or a broad trade body, the EFCA seems to represent little more than the lobbying arm of Tesla’s energy division.

Three of its named “member” businesses  — Silevo, SolarCity and Zep Solar – are actually subsidiaries of Tesla. Two of the remaining companies are small regional solar installers. TechCrunch could not immediately identify Go Solar LLC.

Tesla would not answer questions about EFCA’s membership, funding or control. However, a spokesperson wrote, “Since the [SolarCity] acquisition, Tesla has been winding down its involvement with the coalition, and to the extent we have worked with them, it’s largely been limited to legacy dockets that have already been in progress for multiple years.”

The EFCA is a non-profit corporation formed in Delaware that describes itself blandly as a “national advocacy organization that seeks to promote public awareness of the benefits of solar and alternative energy.”

It was slightly more forthcoming in a filing with the Minnesota Public Utilities Commission early in 2017, discussing proposed community solar gardens. EFCA wrote that it “represents a broad range of businesses that are fully integrated providers of distributed energy resources (DERs) products and services.” These, it wrote, could include rooftop solar, distributed generation, thermal and battery energy storage, and smart energy services, for residential, commercial, industrial and government customers.

Although EFCA’s legal representative for filings in New Hampshire has an EFCA email address, her LinkedIn profile shows that her job title is Campaign Projects Coordinator at Tesla. Recent filings on behalf of EFCA have been made by a senior policy advisor at Tesla. In fact, EFCA itself is listed as a Tesla subsidiary in filings with the SEC.

EFCA’s roots

Tesla lobbies under its own name in many parts of the country, so how did it come to be working under the guise of the EFCA, and why is it continuing to do so?

The story goes back to 2006, and the formation of SolarCity by two of Musk’s cousins, Lyndon Rive and Peter Rive. SolarCity took the novel approach of installing photovoltaic systems for no money down, instead leasing them to homeowners in exchange for decades of payments for cheaper, greener electricity. Musk invested in SolarCity and took the role of chairman.

SolarCity grew quickly, becoming the largest solar installer in the United States by 2013, despite a business model that required taking on mountains of debt. The company regularly sparred with traditional utility companies, often as part of a rooftop solar trade association called the Alliance for Solar Choice, or TASC.

In late 2015, rooftop solar was facing a tough situation in Nevada. NV Energy, the state’s monopoly electricity provider, wanted to slash domestic solar incentives, and the solar industry was fighting for its life. While SolarCity took a collaborative approach, its main rival, SunRun, suggested suspicious ties between the utility and Nevada’s governor.

SolarCity ultimately withdrew from TASC, saying that its focus was moving beyond residential solar. The new EFCA would “capture more of our interests,” a spokesperson told Utility Dive at the time. SolarCity persuaded a small Las Vegas company called 1 Sun Solar Electric, among others, to join EFCA. 1 Sun, which installs five to 10 residential solar systems in the city each month, was keen to protect its local business.

“There’s no way that a small company like ours would be able to go toe-to-toe with NV Energy,” Louise Helton, the company’s vice-president, told TechCrunch. “EFCA gave us standing with the public utility commission, and their attorneys are just stellar.”

Despite the resources EFCA could bring to bear, Nevada did reduce solar incentives at the end of 2015. Many national solar companies, including SolarCity and SunRun, subsequently left the state.

Towards the end of 2016, Tesla bought SolarCity for $2.6 billion, and EFCA along with it. State records and filings indicate that EFCA has now been active in over 30 proceedings in 16 states, and has retained lobbyists in at least Arizona, Utah, Montana, Florida, New Hampshire, Massachusetts and Washington. It does not appear to have initiated any filings that would not benefit Tesla or its subsidiaries.

EFCA had no fewer than 23 lobbyists working for it in Arizona in 2016, while the organization spent $110,000 on lobbyists in Florida the next year, both according to Follow the Money. It has also hired multiple law firms to help it draft and submit filings across the nation.

None of the money for these activities came from 1 Sun, Helton told TechCrunch, nor has EFCA asked 1 Sun to work on the coalition’s behalf. “I would be available to do whatever, but they have not needed anything else from us,” Helton said. “It’s good to be part of something that is fighting the good fight, and giving that entity a flavor of not just being one giant organization, even though Tesla is definitely doing the heavy lifting. We’re very happy to help make it a little bit more diverse.”

EFCA’s recent activity

EFCA’s website is no longer active, and the coalition has not tweeted since early 2017. However, one exception to the organization’s low profile is in Hawaii, where EFCA initiated new filings in 2018 because, Tesla says, the coalition is a known entity there. Even those recent filings, however, are vague about who is actually lobbying in the state.

An EFCA filing in August 2018 stated, “EFCA Members provide solar and storage facilities and services in the State of Hawaii and/or are interested in expanding their provision of those services in the State.”

The only identifiable non-Tesla companies, 1 Sun Solar Electric and Ecological Energy Systems, are based in Nevada and Tennessee, and show no signs of expanding to the Pacific. Tesla, by contrast, has a massive solar plus storage facility on the island of Kauai.

Some of EFCA’s newer filings do reference Tesla, generally to note that the company owns SolarCity.

Tim LaPira, Associate Professor of Political Science at James Madison University, notes that it is virtually unknown for a trade association to be owned and controlled by a single company.

“It’s probably not illegal, but from a transparency perspective, it’s far, far from being ethical,” LaPira said. “When corporations lobby directly, there’s an understanding that they’re asking the government to do something to increase their profits. It’s a very different story when a credible trade association asks the government to do something because they’re not going to benefit directly — they’re asking for some common good. Tesla is trying to get the best of both worlds.”

EFCA continues to lobby state utility commissions, for example proposing changes to net metering and energy storage rules in California last month. That document did not mention Tesla at all.

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SD Times news digest: ActiveState’s Open-Source Language Automation Blueprint, Segment’s Startup Program, and Google’s updated target API level requirements

ActiveState has launched a new methodology for implementing open-source language. Its Open-Source Language Automation Blueprint will provide guidelines for decreasing the costs and risks associated with managing open-source languages.

The blueprint is broken down into four phases: defining open-source language policies, centralizing open-source language dependencies, automating open-source language builds, and deploying and managing open-source language artifacts.

More information is available here.

Segment launches Segment Startup Program
Customer data platform provider Segment is trying to help startups start off on the right foot with its new Segment Startup Program. The program is designed to empower customers to access and use data to grow their business. The program offers a free Team Plan that includes more monthly tracked users than the existing Developer Plan and includes unlimited sources and destinations.

According to the company, the program will also include deals from partners like AWS, Google, Mode, Intercom, and Customer.io. In addition, it aims to provide customers with access to resources on topics such as data collection, analytics, and product-market fit.

Google updates its target API level requirements
Google has announced that it is changing its target API level requirements this year. Come August 2019, new apps will need to target API level 28 or higher, and then in November 2019, updates to existing apps will need to target that level of higher.

According to Google, existing apps that do not receive updates are not affected and can still be downloaded from the Play Store.

In addition, new apps will receive warnings during installation if they do not target at least API level 26, and new versions of existing apps will receive that same warning in November 2019. Starting in 2020, the target API level requirement will advance every year.

Google Cloud Services Platform now in beta
Google has launched a beta of its Cloud Services Platform (CSP). According to Google, CSP simplifies the process of building, running, and managing services, and is a less disruptive approach than current hybrid offerings.

“CSP can make your organization more productive with add-on tools that improve the efficiency of your entire IT team: IT operators benefit from a single unified platform to manage applications and services that span multiple environments. Developers gain a secure foundation on which to build scalable, efficient applications based on containers and microservices. Additionally, security teams get consistent tooling to secure their software supply chain and improve run-time security. With CSP we are partnering with our customers to realize their modernization and hybrid goals,” Google wrote in a post.

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Venmo launches a ‘limited edition’ rainbow debit card for its payment app users

Hoping to entice more users to attach the Venmo MasterCard to their account, Venmo this morning announced it’s launching a “special edition” rainbow-colored version of its debit card that will only be available in limited quantities. Clearly, the idea here is to generate a sense of urgency around ordering the Venmo MasterCard as well as a desire to cater to Venmo users’ interest in more card varieties.

The new rainbow card will be offered until supplies last, says Venmo. And existing card holders can choose to request the rainbow card as a replacement for their current card, if they choose.

The card will be first offered to top cardholders o Friday, and will then be available to all Venmo users starting on March 4th, the company says.

“We launched the LImited Edition rainbow card based on the positive response we received from our customers when we launched the initial set of six colorful cards,” a spokesperson for Venmo explained to TechCrunch. “We know our users love to pick a card color that best suits their own personality and style, so the card design is inspired by many of our existing card colors and gives our users an even more vibrant option for their wallets and at checkout,” they added.

Venmo had first beta tested its debit card in 2017, with an ugly card that featured a photo of a lump of dough on it. (Get it? Dough.)

But the company soon realized that young people care about how a card looks – and a photo of dough wasn’t cutting it. When Venmo launched the public version of the card last July, it instead opted for an array of colorful choices. Users could choose a solid white, black, yellow, pink, blue or green shade for their Venmo debit card.

The rainbow version takes all those same colors and splashes them all over the card face.

It’s…well…unique. But it’s not really all that pretty – especially since the card still has to feature the clashing red-and-orange MasterCard logo.

The new card works the same as the old ones – allowing you to pay for things in the real world using your Venmo balance, as well as to easily split costs of purchases and tips, like you can do in the Venmo app.

It’s not surprising that Venmo is trying out different card designs.

Unique card styles have been proven to attract millennial customers. For example, part of the demand for Chase Sapphire Reserve Card is due to the fact that the card is made using a metallic alloy, instead of plastic. The company even ran out of the alloy for a time, because of the high demand.

Today, there are a number of metal cards on the market, including the one from fintech startup Revolut, hoping to gain similar attention.

In addition, newcomers are testing out colorful styles – SoFi, for instance, launched an aqua and green card last year. And savings app Acorns hired Ammunition, a design firm co-led longtime industrial designer for Apple, Robert Brunner, to design its card.

But millennials often seem to prefer “fancy” to splashy, which is why Venmo rival Square went with a more formal design where it allows you to have your signature laser-printed on the card’s front.

Venmo declined to say how many cards it has shipped to date, or how many limited edition cards are now available.

The company claims demand is growing, however.

“The Venmo card has seen strong interest from our customers,” a spokesperson noted. “We saw 300% month-over-month growth in monthly active card users from August to September 2018, and the top two purchase categories are supermarkets and restaurants as Venmo becomes a part of our user’s everyday spend,” they said.

 

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Showfields raises $9M for a more flexible approach to brick-and-mortar retail

Showfields, which helps online brands move into offline, brick-and-mortar retail, is announcing that it’s raised $9 million in seed funding.

“Our thesis was simple: Make the process of becoming physical as easy as becoming digital,” co-founder and CEO Tal Zvi Nathanel told me.

I’ve written about other companies, like Bulletin, promising a more flexible approach to real-world retail. But one of the things that’s impressive about Showfields is the sheer size of its flagship space — Nathanel said the company has signed a lease for 14,000 square feet in New York City’s NoHo neighborhood.

When I visited the Showfields store last week, only the first floor was open, but it’s already home to a number of brands, ranging from mattress company Boll & Branch, to fitness company Cityrow, to toothbrush company Quip.

Each brand gets their own separate, dedicated space. For example, in the Cityrow space, I got to sit down and try out the rowing machine, while the Quip area had a mock-up bathroom sink to display the toothbrushes.

“This space is about [the brand], not about Showfields,” Nathanel said. “We really look at ourselves as a stage.”

Quip in Showfields

He added that brands can sign-up online to create a pop-up store, providing input while Showfields designs and builds the space. The brand also decides which goods to sell in the store, and which ones to highlight via a touchscreen display. And they can choose whether to have a dedicated staff member, or to share staff with neighboring brands.

Nathanel said the spaces can be designed around different goals — one brand might focus on driving sales, while another might simply want to grow consumer awareness. In each case, Showfields will also provide data sow they can see how the space is performing.

The brands pay Showfields a monthly fee, with a minimum four-month commitment. Nathanel emphasized that Showfields doesn’t make any money on the product sales, which he said allows the company to offer a more “curated” and “customer-centric experience.”

Ultimately, Nathanel said the Showfields approach can also result in a more varied and dynamic retail environment (after all, Showfields bills itself as “the most interesting store in the world.”) And naturally, he’s hoping to bring this to additional cities, though he declined to offer specifics, beyond saying, “Before the end of the year, we’re hoping to have more Showfields.”

Showfields

The seed funding was led by Hanaco Ventures, with participation from SWaN & Legend Venture Partners, Rainfall Ventures, Communitas Capital and IMAX CEO Richard Gelfond.

In a statement, Hanaco General Partner Lior Prosor predicted the rise of “experiential retail,” which will be “focused on doing everything that e-commerce cannot do well – enabling discovery, trial, and the use of all five senses to come to a purchasing decision.”

“We truly believe that by being consumer-centric at their core, [Showfields’] founding team and product will make them a category leader in this space,” Prosor said.

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Circle raises $20m Series B to help even more parents limit screen time

Circle makes a fantastic screen time management tool and today the company announced a round of funding to help fuel its growth. The $20 million series B included participation from Netgear and T-Mobile, along with Third Kind Venture Capital and follow-on investments from Relay Ventures and other Series A participants.

With this round of funding, Circle has raised over $30 million to date.

According to the company, Circle intends to use the funds to expand its product offering and form new partnerships with hardware makers and mobile carriers.

The timing is perfect. Parents are increasingly looking at ways to make sure children and teenagers do not become addicted to screens.

Circle works different from other solutions attempting to limit screen time. It’s hardware based and sits plugged into a home’s network. It allows an administrator, like a parent, to easily restrict the amount of time a device, such as an iPhone owned by a child, is able to access the local network. It’s easy and that’s the point.

Circle sits in a small, but growing field of services attempting to give parents the ability to limit their child’s screentime. Some of these solutions, like Apple’s, sits in the cloud and thought works well, is limited to iOS and Mac OS devices. Others, like those on Netgear’s Orbi products, offer a similar network-wide net, but is much harder to use than Circle.

In my household we use tools like Circle. The lure of the screen is just too great and these solutions, when used in combination with traditional parenting, ensure my children stare into the real world — at least for a few minutes a day.

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Pinterest and Lyft move closer to IPO, and LPs question the Vision Fund’s investment strategy

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

What a week. It had looked a bit quiet with just a few big rounds to cover. I was looking forward to a relaxed episode, frankly. But no, as Kate and I were prepping the show notes, the News Gods opened the heavens and dropped a fifty-weight of mana right on our heads.

It was a lot of news.

In quick order, here’s what we tried to run through while keeping it brief:

  • Pinterest has filed to go public, albeit privately. At long last, Pinterest’s IPO is underway. The social company is gunning for liquidity this year, could go public in June and is not targeting a down IPO. It’s looking like $12 billion and up for Big Pint.
  • Lyft’s IPO is racing alongLyft filed to go public back in December, dropping private filings neck-and-neck with Uber. The two ride-hailing companies are both slated to get out this year, but it seems that Lyft is going to lead the way. Even more, it’s tipped to get out at a $20 billion to $25 billion valuation. As grounding, here’s the best math I could come up with concerning those numbers.
  • DoorDash gets $400 million more. The rumored DoorDash round has landed, though it’s shaped a bit differently than we expected. DoorDash did not raise $500 million at a $6 billion valuation, it instead picked up $100 million less, but at a stronger $7.1 billion valuation. And, of course, the Vision Fund was involved.
  • More Vision Fund largesse lands on Clutter and Flexport. What’s a week with just one Vision Fund round? A waste, of course. So, here are two more. Clutter picked up $200 million while Flexport raised a much more impressive $1 billion. Clutter has now raised around $300 million while Flexport’s capital sheet is flush now to the tune of $1.3 billion. As we touched on during the show, the two companies are now going to have more money than they have ever had before to use; let’s hope that that goes well.
  • Speaking of which, what about those valuations? Two quick things to wrap up here. First, discontent among Vision Fund investors. The Vision Fund’s LPs (the sources of its capital) aren’t perfectly happy with some of its choices. That, and what happened to people not taking blood money? We asked that again, probably shouting into the wind while we do so.

As it turns out Silicon Valley capitalism isn’t a New Man; it’s just the same old capitalism in a sweater vest.

All that and it was good to be back. Chat you all in a week’s time!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.

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SD Times Open-Source Project of the Week: NoFlo

The developers of this week’s highlighted project say their idea isn’t new, harkening back to a 1970s development paradigm from IBM, but that its support for any JavaScript transpiling language and its ecosystem of existing tools and integrations makes flow-based programming of JavaScript components more accessible. NoFlo is an open-source flow-based programming implementation for JavaScript,

The project pulls its explanation of flow-based programming from Wikipedia, which states: “In computer science, flow-based programming (FBP) is a programming paradigm that defines applications as networks of ‘black box; processes, which exchange data across predefined connections by message passing, where the connections are specified externally to the processes. These black box processes can be reconnected endlessly to form different applications without having to be changed internally. FBP is thus naturally component-oriented.”

On the project’s GitHub repository, the developers highlight how the modular nature of flow-based programming emulates Alan Kay’s original definition of object-oriented programming, as well as the well-known Unix philosophy of writing programs that do one thing well and work well together.

“NoFlo is not a web framework or a UI toolkit,” the developers explained. “It is a way to coordinate and re-organize data flow in any JavaScript application. As such, it can be used for whatever purpose JavaScript can be used for. We know of NoFlo being used for anything from building web servers and build tools, to coordinating events inside GUI applications, driving robots, or building Internet-connected art installations.”

NoFlo isn’t a standalone implementation, but part of the Flowhub platform of IDE and consulting services for development of IoT systems and web services. And NoFlo already has a number of tools in its ecosystem:

  • Flowhub — browser-based visual programming IDE for NoFlo and other flow-based systems
  • noflo-nodejs — command-line interface for running NoFlo programs on Node.js
  • MsgFlo — for running NoFlo and other FBP runtimes as a distributed system
  • fbp-spec — data-driven tests for NoFlo and other FBP environments
  • flowtrace — tool for retroactive debugging of NoFlo programs. Supports visual replay with Flowhub

NoFlo can be installed via NPM for Node.js and more information about the JavaScript implementation can be found at the project’s GitHub repository.

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Japanese internet giant Recruit has a new $25M blockchain fund

Crypto market prices may be down significantly, but new investors continue to enter the blockchain space. The latest is Recruit Holdings, the $45 billion Japanese internet giant that owns Glassdoor among other things, which quietly launched a $25 million fund.

The fund is based out of Singapore and it closed in November 2018, but its existence was only made public this week following the announcement of its maiden deal, an undisclosed investment in Beam. Recruit has been very vocal about its intention to offer a crypto fund — I interviewed SVP Youngrok Kim at a Coindesk event in Singapore last year — while it has made equity investments in blockchain companies through its central corporate fund, Recruit Strategic Partners (RSP).

Now, with the crypto fund, Kim — who operates within both RSP and the new fund — said that Recruit is free to do deals in both tokens and equity and generally dive deeper into blockchain.

“When we had an equity fund we weren’t as flexible as we wanted to be,” Kim told TechCrunch in a phone interview this week. “We weren’t in a position to buy tokens and assets. We will continue to have two vehicles, we will use the crypto fund and the RSP fund in tandem as needed.”

That’s all well and good but, with the bubble popped, the number of ICOs is down but not quite out. The dynamics have certainly changed, with token sales now almost universally conducted privately rather than publicly, and for full-time investors and professionals rather than anyone. Still, Kim still sees ample reasons to operate a token-based fund.

“We still see a lot of ICOs, the relative number is smaller but we still see a good amount of deal flow for token and equity raising. We are positive with the outlook,” he explained. “We’re a strong believer in blockchain and decentralized technology.”

Beyond direct investments, the fund will also invest in other funds as an LP to help spread its reach.

“Our investment area is broad, covering deep tech to the application layer too,” Kim explained. “We’re still conducting research to understand core technology and its potential.

“We’re going to very cautious spending the fund, we seek to discover companies that will have a real impact and society and where we can contribute as Recruit,” he added, claiming that there are a number of upcoming deals in the pipeline.

Recruit came on the radar for many in the U.S. through its acquisition of Glassdoor for $1.2 billion last year, but it is already a major name in digital space in Japan, as a recent Bloomberg profile story explained in some detail.

Founded in 1960, it is listed on the Toyko Stock Exchange and valued at over $45 billion. It isn’t just big in Japan, though, and Recruit has some 45,000 employees across 60 countries worldwide.

Its core services are recruitment and HR, but it also operates in the real estate, travel, dining and other segments. It has a history of acquisitions, some of which have included U.S-based Indeed.com (2012) and  Simply Hired (2016) as well as European services restaurant site Quandoo (2015)hair and beauty service Wahanda (2015) and education technology company Quipper (2015).

Despite that, Kim said that he doesn’t anticipate that Recruit will acquire blockchain companies that the fund invests in because it is still early days for the technology in terms of development, adoption and monetization. But, with the fund, Recruit is determined to keep an eye on developments to ensure it doesn’t miss out on potentially significant innovation.

Recruit isn’t the only corporate to start a crypto token fund. Line, another Japanese company that’s best known for its messaging app, launched a $10 million crypto fund last year while Korean rival Kakao has a blockchain consultancy and it is actively doing deals. Kakao made its first blockchain investment in December when it backed Israeli-based Orbs in an undisclosed deal.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

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Apple is offering interest-free financing to boost iPhone sales in China

Apple is looking to get over its sales woes in China but offering prospective customers interest-free financing with a little help from Alibaba.

Apple’s China website now offers financing packages for iPhones that include zero percent interest packages provided in association with several banks and Huabei, a consumer credit company operated by Alibaba’s Ant Financial unit, as first noted by Reuters.

The Reuters report further explains the packages on offer:

On its China website, Apple is promoting the new scheme, under which customers can pay 271 yuan ($40.31) each month to purchase an iPhone XR, and 362 yuan each month for an iPhone XS. Customers trading in old models can get cheaper installments.

Users buying products worth a minimum of 4,000 yuan worth from Apple would qualify for interest-free financing that can be paid over three, six, nine, 12 or 24 months, the website shows.

Apple is also offering discounts for customers who trade in devices from the likes of Huawei, Xiaomi and others.

The deals are an interesting development that comes just weeks after Apple cut revenue guidance for its upcoming Q1 earnings. The firm trimmed its revenue from the $89 billion-$93 billion range to $84 billion on account of unexpected “economic deceleration, particularly in Greater China.”

Offering attractive packages may convince some consumers to buy an iPhone, but there’s a lingering sense that Apple’s current design isn’t sparking interest from Chinese consumers. Traditionally, it has seen a sales uptick around the launch of iPhones that offer a fresh design and the current iPhone XR, XS and XS Max line-up bears a strong resemblance to the one-year-old iPhone X.

The first quarter of a new product launch results in a sales spike in China, but Q2 sales — the quarter after the launch — are where devices can underwhelm.

It’ll be interesting to see if Apple offers similar financing in India, where it saw sales drop by 40 percent in 2018 according to The Wall Street Journal. Apple’s market share, which has never been significant, is said to have halved from two percent to one percent over the year.

Finance is a huge issue for consumers in India, where aggressively priced by capable phones from Chinese companies like Xiaomi or OnePlus dominate the market in terms of sales volume. With the iPhone costing multiples more than top Android phones, flexible financing could help unlock more sales in India.

China, however, has long been a key revenue market for Apple so it figures that this strategy is happening there first.

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Rakuten’s Viber chat app plans to charge to operate chatbots in controversial move

Viber, the messaging app down by Japanese e-commerce firm Rakuten, is poised to implement a controversial new strategy that will see it charge companies that run chatbots on its platform.

The conventional wisdom is to work with content companies to help bring users to messaging platforms and keep them engaged but Viber, which has struggled to keep up with rivals like WhatsApp and Line, is turning that on its head.

Starting April 1, Viber will charge chatbot operators $4,500 per month for the ability to send up to 500,000 messages to users. Those who exceed that range will be eligible to send up to one million messages per month for $6,500. The new fees are being communicated to companies that operate Viber chatbots, but Viber hinted at its new monetization plans in an email to TechCrunch.

“Bots can be published for free; however, to ensure the highest discoverability and quality of content for bots, we will be introducing a commercial commitment in the coming months. A key aim with this move is to ensure that users are presented with a steady stream of highly relevant and relatable content and a commercial commitment is one key tool for ensuring a quality experience for users,” Debbi Dougherty, head of B2B Marketing & Communications for Viber, explained.

This is a risky strategy that is likely alienate companies that operate chatbots on Viber as well a brands who bought into a bot strategy.

These costs have come out of the blue, much to the surprise of startups that spent time developing chatbots for the Viber platform.

“For an early stage startup, this isn’t going to work,” Edmundas Balčikonis, co-founder of Eddy Travels — a travel concierge service that took part in Techstars’ Toronto program — told TechCrunch by phone.

Balčikonis said his startup was attracted to the Viber platform because it provided all the necessary documentation and APIs to build a chatbot up front and in public. Having spent eight months developing its Viber bot, Eddy Travels plans to double down on its efforts with Facebook Messenger and Telegram where its bot-based service runs without charge and has seen multiples more users and engagement.

“Viber encouraged us to built the bot, but never discussed the price and there’s no price in the website documentation,” he said. “Messenger is showing way more traction for us… we didn’t get any significant engagement on Viber.”

Indeed, the strategy seems to be quite the opposite that Viber needs to take if it is to gain marketshare from the chat app leaders. WhatsApp — the world’s largest messaging service with over 1.6 billion monthly active users — doesn’t currently support chatbots, but instead of playing to its strengths, Viber is trying to squeeze additional revenue here under the cloak of “a quality user experience.”

Times are already hard though at Viber. TechCrunch spoke to six chatbot startups who develop a range of services for customers, including banks, insurance companies and media, but we found that none run any projects on Viber. Each said their desire to work on the Viber platform would diminish further if they were forced to pay for the privilege.

The Viber service is popular in pockets of the world, including the Philippines, Myanmar and some Eastern European markets. Current CEO Djamel Agaoua, a seasoned advertising executive, promised to work on the revenue and business model when he took the helm in 2017. Under his leadership, Viber has pushed its communities chat feature for brands and tried to tap into e-commerce, but little is known of how that has progressed.

Rakuten’s recent 2018 financial report was released this month and it made scant reference to Viber, other than to note that the service and Rakuten Mobile, the company’s MVNO offering in Japan, had “substantially increased revenue thanks to their full-scale aggressive sales activities.”

No raw figures were provided but Rakuten’s ‘Internet Services’ division, which houses Viber and Rakuten Mobile, saw its annual revenue increase by 15.9 percent to 788.4 billion JPY. That’s around $7.1 billion and it sounds impressive, but the bulk of that revenue is from Rakuten Mobile, which has teamed up with traditional operator KDDI to take a crack at Japan’s mobile market.

What we know about Viber is that it has increased its content monetization — which included advertising, sponsored stickers and more — and that now accounts for the bulk of its revenue having surpassing income from Viber VoIP calling packages.

But, again, there’s no raw revenue data here. Rakuten also no longer provides active user information for Viber, which it said said has registered over one billion users since its creation in 2011. That’s not an informative statistic.

Things seem to be so bad that Viber doesn’t even provide an active user number to advertisers, according to a pitch deck seen by TechCrunch. The data shown includes a selection of actions that Viber claims happen per minute, including 1.2 million logins, but there’s no headline monthly active user statistic. Barcelona, which counts Rakuten as a sponsor, and Coke are among the brands that use Viber.

Now the service’s content monetization push has extended into chatbots, but the obvious risk is that companies and brands will simply go elsewhere where, frankly, they already have a larger and more captive audience.

Rakuten bought Viber for $900 million in January 2014, just one month before Facebook forked out $19 billion to acquire WhatsApp. The Viber deal seemed prescient. Sure it didn’t have the same scale as WhatsApp but it was comparable — 300 million registered compared to WhatsApp’s 450 million active — and teaming with a major internet company would bring a larger budget and opportunities.

The sad reality of today, however, is WhatsApp has grown into one of the world’s most important social services but Viber has floundered. Policies that are as short-sighted as monetizing chatbots will ensure Viber continues to be an also-ran. That surely wasn’t how Rakuten envisaged its acquisition progressing.

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