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Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

Alex, Natasha and Mary Ann got together with Grace once again this week for our weekly roundup show, and hot dang was there a lot to talk about. So much so that we actually had to cut one topic from our notes. Any guesses what that may have been?

Regardless, here’s the rundown:

• We had a big fintech theme this week, kicking off with the huge news that Jack Ma is giving up control of Ant Financial. Two specific tidbits stood out around Ant’s origin story and Ma’s flex of an ownership hold.
• From there, it was time to talk Guava, Pogo and TomoCredit, our Deals of the Week. The focus here was around just how inclusive certain fintechs can be, so thank you to founders who remind us to raise the bar constantly.
• Next up? A new solo fund that broke out of a16z. Why leave to do a scary thing when risk is high? We talk about that, fintech innovation and Rex Salisbury’s LP base. (Plus, more on solo founders coming soon on TechCrunch+).
• Then we dug into Mary Ann’s behemoth investor survey and closed with a look at the Coinbase-SEC situation.

And we had a great time to boot! Chat soon!

Twitter’s bid to get Elon Musk to follow through with his multibillion-dollar bid to buy the social network will officially go to trial on October 17, a Delaware judge has confirmed.

As Bloomberg reported earlier today, the ongoing feud between Twitter and the world’s wealthiest man will come to a head in the Delaware Court of Chancery from October 17-20.

The ongoing saga has taken many twists and turns since Elon Musk’s $44 billion offer was accepted by Twitter back in April. The Tesla and SpaceX CEO decided he didn’t want to buy Twitter any more, citing a lack of clarity on Twitter’s bot data, but Twitter has been pushing to force the deal through legal action.

While Musk initially wanted to delay a trial until next February, a judge last week ruled that Twitter could accelerate proceedings to October this year — though we didn’t know a specific date until today. Musk can perhaps claim a minor victory, though, given that he had more recently sought a start date of October 17 vs. Twitter’s request of October 10.

At its Q2 earnings report last week, Twitter revealed that it had spent $33 million during the previous quarter on the pending acquisition, a figure that can only escalate in the months leading to the trial.

More smartphone struggles, as reports trickle in for Q2. Per Canalys, global shipments dropped 9% for the quarter, reversing a brief recovery for the category, whose woes have only been amplified by the pandemic, ensuing shutdowns, supply chain issues and persistent economic uncertainty.

The 287 million units represent the lowest figure since Q2 2020, when the pandemic started. Interestingly, the confluence of longstanding concerns have led to new issues — namely oversupply. Slowing interest has saddled companies with back stock on older models.

“Supply chain shortages are no longer the most pressing issue as component orders are being cut rapidly and suppliers have started to be concerned about oversupply,” analyst Tony Zhu notes in a release. “It has resulted in price cuts for key components, which reduces costs for vendors. Vendors could use the extra savings to improve the product competitiveness of new launches in the second half of the year. At the same time, that might make getting rid of old models even harder. The oversupply situation is demanding more of vendors’ planning capabilities than the shortage period.”

There’s been a lot of correction happening in the industry, coupled with a good deal of uncertainty. A category that has effectively trained consumers to anticipate annual spec updates is also understandably having difficult moving older models. Device makers will press on, of course, adopting a range of different strategies to cope with the crunch.

Samsung fared the best, maintaining the top spot with 21% of the market. The company has shifted much of its focus to the budget-tier A-Series — after all, people still need phones, even if inflation and uncertainty have made purchasing $1,000 flagships largely untenable. On the flip side (so to speak), the company is also continuing to push its pricey foldable strategy as the way forward.
Samsung is expected to announce a pair of new devices next month. The company says it shipped nearly 10 million foldables in 2021 alone.

Apple, meanwhile, has held onto second on the lasting strength of the iPhone brand. The iPhone 13 defied expectations as the company highlighted a slight revenue increase in last night’s earnings report, defying broader economic headwinds. A good indication, perhaps, for remaining consumer confidence, in spite of macro trends. Earlier this week, a report noted that the Chinese market saw a sharp 14.2% decline in sales, owing to lockdowns and lowered consumer confidence.

Yolkswagen dropped a bombshell announcement late last week: Herbert Diess was out as CEO.

As a manager, Diess was controversial, with a style that chafed both executives and labor leaders alike. But as a strategist, he was on firmer ground, deftly steering Volkswagen out of the Dieselgate scandal and setting it on a path toward full electrification.

With Diess leaving at the end of August, Porsche CEO Oliver Blume will step into Volkswagen’s corner office. There are plenty of reasons to think that Blume will continue the company’s EV push. After all, he oversaw the development and rollout of the sports car maker’s first electric model, the Taycan, which is already outselling the flagship 911.

But Blume is also an advocate for e-fuels, which are fossil-fuel replacements made from hydrogen and carbon dioxide. Last year, he reportedly went so far as to personally lobby for them with the German finance minister, who subsequently pushed back against EU plans to phase out fossil fuel vehicles entirely. (The whole business, known as Porschegate in the German press, has roiled national politics.)

Under Diess, Volkswagen’s path toward an electric future appeared to be set. Now, under Blume, it seems less certain. His push for e-fuels could bring the company some much-needed stability. But it also risks becoming a strategically perilous distraction at a time of great turmoil in the automotive industry.

Kenya’s ethnic cohesion watchdog, the National Cohesion and Integration Commission (NCIC), has directed Facebook to stop the spread of hate speech on its platform within seven days or face suspension in the East African country.

The watchdog was reacting to a report by advocacy group Global Witness, and Foxglove, a legal non-profit firm, which has fingered Facebook’s inability to detect hate speech ads. This comes as the country’s national general elections approach.

The Global Witness report corroborated NCIC’s own findings that Meta, Facebook’s parent company, was slow to remove and prevent hateful content, fanning an already volatile political environment. The NCIC has now called on Meta to increase moderation before, during and after the elections, while giving it one week to comply or be banned in the country.

“Facebook is in violation of the laws of our country. They have allowed themselves to be a vector of hate speech and incitement, misinformation and disinformation,” said NCIC commissioner Danvas Makori.

Global Witness and Foxglove also called on Meta to halt political ads, and to use “break glass” measures — the stricter emergency moderation methods it used to stem misinformation and civil unrest during the 2020 U.S. elections.

In Kenya, Facebook has a penetration of 82%, making it the second most widely used social network after WhatsApp.

Facebook’s AI models fail to detect calls for violence

To test Facebook’s claim that its AI-models can detect hate speech, Global Witness submitted 20 ads that called for violence and beheadings, in English and Swahili, all of which, except for one, were approved. The human rights group says it used ads because, unlike posts, they undergo a stricter review and moderation process. They could also take down ads before they went live.

“All of the ads we submitted violate Facebook’s community standards, qualifying as hate speech and ethnic-based calls to violence. Much of the speech was dehumanizing, comparing specific tribal groups to animals and calling for rape, slaughter and beheading,” Global Witness said in a statement.

Following the findings, Ava Lee, the leader of the Digital Threats to Democracy Campaign by Global Witness said, “Facebook has the power to make or break democracies and yet time and time again we’ve seen the company prioritize profits over people.”

“We were appalled to discover that even after claiming to improve its systems and increase resources ahead of the Kenyan election, it was still approving overt calls for ethnic violence. This isn’t a one-off. We’ve seen the same inability to function properly in Myanmar and Ethiopia in the last few months as well. The possible consequences of Facebook’s inaction around the election in Kenya, and in other upcoming elections around the world, from Brazil to the U.S. midterms, are terrifying.”

Amazon’s consumer-focused storage service, Amazon Drive, will wind down over the next year, Amazon announced today. In an email to users, the company said that it was taking the opportunity to “more fully focus” its efforts on Amazon Photos, Amazon’s answer to iCloud Photos and Google Photos.

Amazon Drive customers have until December 31, 2023 to save their stored files; as of January 1, 2023, file uploading will cease to work. Photos and videos will be transferred to Amazon Photos automatically, but other file types must be downloaded manually from the Amazon Drive web dashboard.

Users who currently subscribe to paid Amazon Drive plans can cancel their subscriptions now for a potential refund. Cancellation can be done on the web or through the Android and iOS apps — at least before the apps are removed from the Google Play and App Store, respectively, on October 31.

Amazon launched Amazon Drive as Amazon Cloud Drive in 2011, initially offering pay-as-you-need tiered storage plans both for Amazon Prime and non-Prime users. November 2014 saw the rollout of an API that allowed third-party developers to integrate Amazon Drive into their own apps to save things like game settings, preferences and other app state data in the cloud.

Unlimited plans for Amazon Drive were introduced in 2015, and then discontinued two years later. Storage became limited to 5 GB for non-photo uploads a short time afterward. Amazon Prime members and Fire Tablet owners, however. retained free unlimited photo storage.

Competition was likely a factor in Amazon Drive’s demise. After all, countless providers offer cheap cloud file storage these days, including Google Drive, Dropbox, Box and OneDrive. Amazon Drive’s pricing wasn’t even particularly competitive — the service charged $119 a year for 2 TB, the going rate for the same volume of storage at Dropbox and Google Drive.

According to Statista, Google Drive was the most popular cloud storage service as of September 2021, followed by iCloud and OneDrive.

TikTok parent company ByteDance filed a trademark application with the U.S. Patent and Trademark Office in May for a service called “TikTok Music.” First spotted by Business Insider, the filing indicates that the trademark could be applied to a mobile app that would allow users to purchase, play, share and download music.

The short-form video app is already a popular tool for discovering music, and oftentimes can lead to songs rising in popularity after they’re used in viral videos and trends. A report released by the company last year suggested that 175 songs that trended on the short-video platform ended up on the Billboard 100 chart. In addition, a recent report published by a U.K.-based music investor suggested that songs that are popular on TikTok drive additional views on YouTube and streams on other platforms, like Spotify.

While TikTok drives these songs to be popular, it doesn’t have its own music streaming platform — at least in the U.S. — to make money from them. Instead, users turn to popular services like Spotify or Apple Music to play their favorite TikTok songs. However, TikTok’s parent company ByteDance operates a music streaming service called Resso in India, Brazil and Indonesia, and we understand it had previously considered bringing this service to more markets.

A former ByteDance employee told TechCrunch the company had weighed launching Resso to various global markets under a “TikTok Music” moniker, in fact. Specifically, it had been considering launches in mature markets like the U.K. and Australia, the source said.

Resso’s app could be a viable threat to existing U.S. streamers given its close ties to TikTok and its social networking aspects. Currently, Resso offers a TikTok-like user interface where users can skip through the songs by scrolling up and down. It also has the option to comment on songs and albums, and edit the cover of users’ playlists — similar to what the TikTok Music trademark suggests.

The app has seen solid progress in its existing markets, mobile data indicates. According to analytics firm SensorTower, the company saw 42.3 million downloads from the App Store and Google Play from January to May this year — growth of 19% year over year for the same period. The music streaming app has had 184 million lifetime downloads overall.

ByteDance’s filing lists numerous use cases for the TikTok Music trademark. One use case listed in the filing for “TikTok Music” includes an app that would allow users to livestream audio and video, along with the option to “edit and upload photographs as the cover of playlists.” The app would also allow users to leave comments on music, songs and albums, according to the filing. Another use case suggests that the service could be used to “livestream audio and video interactive media programming in the field of entertainment, fashion, sports, and current events.” The filing also suggests the app could be used to “provide users with podcast and radio broadcast content.” The addition of podcast content alongside music would make TikTok Music an even bigger competitor to Apple Music and Spotify.

A day after Central Bank of Kenya (CBK), Kenya’s monetary authority, said that Chipper Cash and Flutterwave were not licensed to operate in the East African country, the regulator has directed all financial institutions to cease doing business with the two fintechs.

The CBK’s bank supervision deputy director, Matu Mugo, directed all regulated banks, microfinance and mortgage finance institutions to stop their partnerships with the two startups with immediate effect — dealing a blow to Flutterwave and Chipper Cash, some of Africa’s highest valued startups.

The letter to the CEOs followed remarks by CBK’s governor, Patrick Njoroge, that the two startups are not licensed remittance or payment service providers in Kenya — one of the biggest fintech hubs in Africa.

“It has come to the attention of the Central Bank of Kenya (CBK) that Flutterwave Payments Technology Limited and Chipper Technologies Kenya (Chipper) have been engaging in money remittance and payments services without licensing and authorization by CBK…You are therefore directed to immediately cease and desist from dealing with Flutterwave and Chipper,” said Mugo in the letter.

Flutterwave, which is also facing money laundering allegations in Kenya, in a statement said it has been operating in the country through partnerships with regulated banks and telecoms, as it waits for a payments service provider license it applied for in 2019.

Flutterwave, which recently raised $250 million at a $3 billion valuation, facilitates cross-border payments transactions of small to large businesses in Africa via one API. Some of its international clients include Booking.com, Flywire and Uber. In a February interview with TechCrunch, the African payments giant, with an infrastructure reach across 34 countries on the continent, said it was processing 200 million transactions worth more than $16 billion.

Chipper Cash is also a cross-border payments company with operations in Nigeria, Ghana, Uganda, Nigeria, Tanzania, Rwanda and South Africa.

The U.S. Senate earlier this week approved the CHIPS Act, which includes $52 billion to subsidize domestic semiconductor production. It still has to struggle its way through the bureaucracy (here’s a quick refresher), but clearing the Senate is a huge and important step toward the American chip fabrication industry getting a serious chunk of cash.

Personally, I’m psyched that this may be happening for a few reasons. Yes, yes — supply chain problems and chip shortages have been the bane of everyone’s life for a hot minute, and onshoring some of these fabrication materials, tools and know-how will go a long way toward making the U.S. less reliant on external manufacturing and more resilient in general.

That’s all good and well, but let’s be honest: $52 billion isn’t exactly a sachet of coppers and nickels, but chip manufacturing is expensive. The last planned chip factories I can remember are the $19 billion plant Intel is building in Germany and the $20 billion plant the company is building here in the U.S. If that’s the price tag of a factory, the subsidy builds two and a half plants. That means jobs, but it doesn’t exactly turn the U.S. into a chip-fab juggernaut overnight.

Far more than new factories, I’m most excited about the possibility of history repeating itself. Intel’s choice to build a $20 billion chip fabrication facility in Columbus, Ohio, along with the more recent news of the potential cash injection into the industry, could set the stage for a startup ecosystem boost.

Google has pulled the popular battle royale game Battlegrounds Mobile India, more popularly known as BGMI, from its Play Store in India after a government order, a year after developer Krafton launched the app following a ban on its other similar title PUBG in the South Asian market. The BGMI game has also been delisted from Apple’s App Store in the country.

The Android-maker confirmed the development shortly after publication of the story. “On receipt of the order, following established process, we have notified the affected developer and have blocked access to the app that remained available on the Play Store in India,” a Google spokesperson told TechCrunch.

The app was delisted by Google from the Play Store on Thursday evening, and Krafton itself delisted the app from the Apple App Store shortly afterwards, a person with direct knowledge of the matter told TechCrunch. The iPhone-maker didn’t respond to a request for comment.

A Krafton spokesperson acknowledged the delisting and said the company was seeking clarification. Shares of Krafton tumbled over 9% on Friday, until partial recovery.

The development follows a growing tension between India and China, two nuclear-armed neighboring nations that have been especially at odds since deadly skirmishes along the Himalayan border in 2020. India has since reacted to the move by banning over 300 China-linked apps including PUBG and TikTok, both of which counted India as their largest overseas market by users.

Of the hundreds of apps that New Delhi has banned in the country, Krafton’s PUBG was the only title that made a return — though with a completely revamped avatar.

Krafton said it had cut ties with its publishing partner Tencent, which is also a major investor in the firm, and pledged to invest $100 million in India’s gaming ecosystem. Krafton — which has backed a number of Indian startups including Nodwin Gaming, Loco, Pratilipi and Kuku FM in the past one and a half years — told TechCrunch earlier this week that it estimated that its investment in India will touch about $140 million by next month.