Category: Tech news

Today Facebook made one of its biggest plays yet to build out the services it provides to businesses on its platform: It is acquiring Kustomer, a startup founded with the aim of disrupting the customer services industry with a new approach to providing agents with better data and a more unified picture of users by bringing together the many social media and other channels and longer history between them and the company in question.

Terms are not being disclosed, but we have confirmed with sources very close to the deal that it was for $1 billion. Reports of the deal (and alleged price) were published earlier today by the WSJ.

Kustomer — co-founded by CEO Brad Birnbaum and Jeremy Suriel (the two worked together across a range of other places, including Airtime and AOL and had sold a previous startup to Salesforce) — had raised around $174 million in private funding from investors that included Coatue, Tiger Global Management, Battery Ventures, Redpoint Ventures, Cisco Investments, Canaan Partners, Boldstart Ventures and Social Leverage. It was last valued at $710 million, according to estimates from PitchBook.

Facebook’s interest in Kustomer is very straightforward, while at the same time a very significant sign of what it hopes to do strategically.

The social network has been slowly building up a big business providing customer services to businesses on its platform, and the plan now is to double down on that with a platform that will do much more of that, potentially as a paid service.

There are some 175 million people using Facebook this way today, covering both those who use Facebook to engage with businesses that use Facebook as their primary online “identity” — in place of a website or mobile app of their own, companies today often simply have a Page on Facebook — and those businesses that provide conversation channels on Facebook-owned messaging apps like Instagram, Messenger and WhatsApp as a complement to other ways (and sometimes the sole way) to contact them.

Considering that Facebook has upwards of 2 billion users, 175 million doesn’t sound like a lot.

But as the company starts to see more keen competition from the likes of Snapchat, TikTok and likely others over time, having a better product to sell businesses alongside their other services will give Facebook a better way of locking them into the Facebook ecosystem. It will also give the company a stronger shot at a newer revenue stream to complement advertising, which remains its biggest cash cow by a big margin.

Indeed, customer service is an interesting play for Facebook to be making. The company has been investing in and building a number of additional features for businesses on its messaging apps — most recently on WhatsApp, for example, it started to make it easier for businesses to let people shop and do more on the app. Within that customer service is a huge industry that stretches well beyond the Facebook walled garden.

Indeed, the specific term Kustomer and other CRM companies use to describe what they do is “omni-channel” customer relations. That is to say, it gives the Kustomer business users a complete picture of the many disparate places where “conversations” might be happening with customers — be it on apps, on social media, in websites, via chatbots, or email, etc. The logic is that this makes the agent more efficient and gives him/her a better picture of both how the business is faring across those channels, and more context about a specific user contacting the company from one of those channels, as well as a more complete picture of the customers themselves.

For Facebook, its “customer relations” profile up to now has been about users within its app walls. This gives it a much bigger opportunity to essentially control that bigger picture and bigger relationship, regardless of the platform being used.

Coincidentally, it was only earlier this month that I reported that Snap acquired Voca.ai, which makes customer support voice bots.

While we have no idea how Snap will use that tech — some have speculated it could be to build more voice commands and audio-based tech for its Spectacles — I wrote at the time that it would make a lot of sense to bring this into a bigger product portfolio providing more tools to businesses already using Snapchat to market themselves. This Kustomer acquisition feels very timely in that regard.

 

A French administration in charge of consumer rights and fraud has investigated Wish, the mobile e-commerce platform that recently filed to go public. While the company generated $1.9 billion in revenue in 2019, the French administration believes Wish could be selling products, such as sneakers and perfumes, with images incorrectly showing the logos of famous brands.

In addition to those wrongly labeled products, the administration says Wish pretends products are on sale while they aren’t. The platform could be displaying -70%, -80% or -90% on some products even though the original price is completely made up.

The administration in charge of the investigation is the direction générale de la concurrence, de la consommation et de la répression des fraudes (DGCCRF), an administration that reports to the French Ministry for the Economy and Finance. They have transmitted the report to a court in Paris.

Now, it’s up to the court to decide whether the allegations are right or unfounded. “The court can subpoena Wish or offer to plead guilty. We should know in the coming days,” France’s digital minister Cédric O told me.

On Twitter, Cédric O highlighted one case in particular. “Wish already stood out during the first lockdown by selling facemasks that don’t meet safety standards. French people who are using the app to find low-cost products should know that they’ll mostly find scams,” he tweeted.

If Wish is found guilty, the company could risk up to 10% of its annual revenue in France. In particular, it’s going to be interesting to see whether Wish is responsible for products sold by third-party merchants.

The timing of the case is a bit odd as Europe’s upcoming Digital Services Act should overhaul the e-commerce directive from 2000. All eyes are on content moderation, but the Digital Services Act should also focus on counterfeit sellers, the liability of marketplaces and more.

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According to a report from the Financial Times, Facebook-backed cryptocurrency Libra could launch in January. More interestingly, the Libra Association, the consortium created by Facebook, could scale back its ambitions once again.

When it was first unveiled, the Libra cryptocurrency was supposed to be a brand new currency tied to a basket of fiat currencies and securities. Originally, it wouldn’t be based on a single real world currency, but on a mix of multiple currencies.

Many central banks and regulators have been concerned about this vision. That’s why the Libra Association changed course and started working on several single-currency stablecoins.

Stablecoins are cryptocurrencies that don’t fluctuate in value against a specific fiat currency. For instance, one unit of a USD-backed stablecoin is always worth one dollar. Libra mentioned USD, EUR, GBP or SGD as base currencies for its various stablecoins.

According to the Financial Times, the Libra Association now plans to launch a single dollar-backed coin. It’ll compete directly with other stablecoins, such as USDC, PAX and Tether (USDT). The Libra Association still plans to roll out other currencies, but it’ll happen at a later time.

Facebook will most likely launch its own Libra wallet at the same time. Originally called Calibra, the Facebook subsidiary has been rebranded to Novi back in May.

In addition to a standalone app that will let you send and receive Libra tokens, you’ll be able to manage your Novi account from Messenger and WhatsApp. Facebook expects people to start using Novi for remittance purposes and peer-to-peer payments.

It’s unclear whether other members of the Libra Association also plan to launch their own Libra-based service at the same time. Members include Farfetch, Lyft, Shopify, Spotify and Uber.

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Ride-hailing firms such as Ola and Uber can only draw a fee of up to 20% on ride fares in India, New Delhi said in guidelines on Friday, a new setback for the SoftBank-backed firms already struggling to improve their finances in the key overseas market.

The guidelines, which for the first time bring modern-age app-based ride-hailing firms under a regulatory framework in the country, also put a cap on the so-called surge pricing, the fare Uber and Ola charge during hours when their services see peak demands.

According to the guidelines, Ola and Uber — and any other app-operated, ride-hailing firm — can charge a maximum of 1.5 times of the base fare. They can, however, choose to offer their services at 50% of the base fare as well. The rules also state that drivers will not be permitted to work for more than 12 hours in a day, and that the companies need to provide them insurance cover.

Uber and Ola have not previously publicly shared precisely how much they charge their drivers for each ride, but industry estimates show that a driver partner with either of these firms makes up to 74% of the ride fare, after paying taxes. The new guidelines say drivers should get to keep at least 80% of fares.

The cap on the ride fare and implied insurance costs will raise operating costs in India for Uber and Ola, both of which have eliminated jobs in recent months amid the pandemic to trim costs. The South Asian nation, which has attracted many giant international firms in recent years as they look for their next growth market, in the meantime has entered an unprecedented recession.

But not everything about the guidelines will hurt Uber and Ola, both of which had no comment to share on Friday. The rules will enable the companies to offer pooling (shared car) services on private cars, though there is a daily limit of four intra-city rides on such cars, and two weekly inter-city rides.

Ujjwal Chaudhry, an associate partner at Bangalore-based marketing research consulting firm Redseer, said the guidelines by the government will have a mixed impact.

“While it is positive in terms of formalizing the sector as well as increasing the consumer trust on aggregators through improved safety regulations. But, overall the impact of these guidelines on the ecosystem growth are negative as capping surge and platform fee will ultimately lead to reduced earnings for 5 Lac (500,000) drivers (currently on these platforms) and will also lead to increased prices and higher wait times for the 6-8 crore (60 to 80 million) consumers who use it for their mobility and commute needs,” he said in a statement.

The rules also address a range of other factors surrounding a ride. For instance, under no circumstance can the cancellation fee imposed on a rider or driver be more than 10% of the total fare, and the fee cannot exceed 100 Indian rupees, or $1.35. Also, female passengers looking for a pooled service will have the option to share the cab with only female passengers, the rules say. Cab aggregators are also required to establish a control room with round-the-clock operations.

Ola and Uber dominate the app-based ride-hailing market in India. Both the companies claim to lead the market, though SoftBank, a common investor, said recently that Ola had a slight lead over Uber in India.