In recent years, YouTube has been working to transform its platform into more of a shopping destination with product launches like shoppable ads or more recently, the ability to shop directly from livestreams hosted by creators. Now, it’s furthering that investment with new features for live shopping experiences. At yesterday’s YouTube Brandcast event, where the company pitched itself to advertisers as a better place for their TV ad dollars, YouTube teased upcoming features that it claimed would make it easier for viewers to discover and buy from brands.

The company touted its forthcoming tools as offering advertisers a better way to engage viewers and make connections with their audience.

One new feature, explained YouTube, will allow two creators to go live at the same time to co-host a single live shopping stream. This could effectively double the draw for the event, as each creator would bring their own fanbase to the stream.

This feature arrives shortly after YouTube in March announced a pilot program called “Go Live Together,” a new mobile collaborative streaming feature that would enable creators to invite guests to their livestream with a link before going live together. This trial suggested YouTube had its eye on developing tools to better power joint livestreams — just as it’s now planning to introduce with its upcoming two-person live shopping streams. The addition could also make YouTube more competitive with Instagram, which launched the ability for creators to go live with up to three people last year.

In addition to leveraging creators to build an audience for a live shopping event, YouTube’s shopping livestreams platform also offers other tools specifically designed to drive sales. The brand-integrated shopping experience actually allows viewers to shop the products shown in the video by tapping on a built-in “view products” button that then brings up a list of items featured by the creators.

The company says its new two-person live shopping feature will roll out sometime later this year.

Another upcoming option announced at Brandcast is something YouTube calls “live redirects.”

In this case, creators will be able to start a shopping livestream on their channel, then redirect their audience over to a brand’s channel for fans to keep watching. This allows brands to tap into the power of the creator’s platform and reach their fanbase, but then gives the brands themselves access to that audience — and the key metrics and analytics associated with their live event — directly on their own YouTube channel. This will also roll out sometime this year, says YouTube, but didn’t provide a timeframe.

YouTube’s announcements follow the broader growth of the live e-commerce market in the U.S. — a trend inspired by the livestream shopping activity surging in China, where streamers can pull in billions of dollars in a matter of hours. Today, a number of startups have also entered this space, including TalkShopLive, PopShop Live, NTWRK, Whatnot, ShopShops, Supergreat and others. Klarna even added virtual shopping capabilities to connect its buy-now, pay-later customers with live product demos from retail partners.

Retailers, too, are getting in on the action. Nordstrom launched a live events platform, while Forever 21 and Macy’s are among those that added live shopping to their apps.

Meanwhile, big tech platforms are wooing brands by touting their wider reach.

Over the past year or so, we’ve seen Walmart pilot testing TikTok’s first livestreamed shopping experience; Facebook’s live shopping boosting sales for brands like Petco, Benefit, Samsung, Anne Klein and others; and Instagram hosting live shopping events to cater to holiday crowds. Twitter even began to test livestream shopping, also with Walmart’s help on its pilot run — but it’s unclear where such initiatives will land if the Elon Musk buyout comes to pass.

While YouTube is certainly one of the largest creator platforms for video, there is some indication that it needs to catch up to its big tech rivals in livestream shopping, however. An eMarketer study from Jan. 2022 found that only 14.4% of survey respondents said YouTube’s platform drove them to purchase during a livestream event compared with 15.8% for TikTok, 45.8% for Instagram and 57.8% for Facebook.

Image Credits: eMarketer/Insider Intelligence

YouTube’s new livestream features — and particularly the one that pushes a creator’s fanbase to a brand’s channel — could make its solution more compelling.

“People come to YouTube every day to make decisions about what to buy, and 87% of viewers say that when they’re shopping or browsing on YouTube, they feel like they can make a faster decision about what to purchase because of all the information that we have in videos,” said YouTube CEO Susan Wojcicki, speaking to the audience at the Brandcast live event last night. “We have so much shopping activity that is already happening on YouTube, so we are making it even easier for viewers to discover and to buy,” she said.

Founded in 2018, European micromobility startup Reby took an interesting path. It deployed e-scooters in the city of Zaragoza (Spain), during the COVID-19 pandemic, but also created a SaaS-oriented ‘MaaS’ (mobility-as-a-service) platform. It then won 18 agreements with public administrations for e-mobility across Italy and Spain, slightly under the radar compared with large, well-funded players like Tier, Voi and Bolt. In other words, without needing to become a large player, it secured the kinds of European municipal licenses coveted by micromobility players.

Founded by four entrepreneurs (Pep Gómez, Kiran Thomas, Cristina Castillo, and Guillem Pagès), Reby has now been acquired by House of Lithium, a Canadian private equity firm, which was already a large shareholder in the company. The firm invests in private and publicly listed entities involved in or connected with the electric mobility value chain. The transaction is priced at $100 million. The company’s founder, Pep Gómez, with the rest of the management team, will continue managing Reby. The company says it closed the year with approximately $15M of revenue with approximately US$3M EBITDA.

Reby had raised a total of US$17.9M from EXOR, 14W Ventures, Neo Fund, Fuel Capital, Hard Yaka, Day One Ventures and some angels such as like Simon Rothman (Founder of eBay Motors and board member to Tesla and Lyft), Marcelo Gigliani (APAX Digital) and Hugo Arevalo (Jobandtalent).   

In a statement, Kevin Taylor, Chairman of House of Lithium, said: “Combining Reby’s leading IoT technology and proven ridesharing business model with House of Lithium’s manufacturing, distribution, e-commerce, and retail assets, will contribute to creating an end-to-end mobility platform to maximize top-line opportunities and bottom-line results.”

Reby made a point of manufacturing its own vehicles, eschewing Chinese-made scooters; operating only under exclusivity with city hall agreements; and financing vehicle investments largely with asset-backed debt.
                     
Gomez added: “The financial capacity and capital markets expertise of the House of Lithium team makes this a great partnership with the extra power that Reby needs to continue its growth… The time for EV companies burning money with artificial growth is over, giving us a massive opportunity to win in an untapped market focusing on infrastructure regulation and R&D development in security and public space occupation, which is imperative for cities.”
        
Reby is the second venture for Gomez, who at 19 years old was the sole founder of the Fever experiences app, which has raised $298.8M to date and was backed by Goldman Sachs, Accel Partners, and Rakuten, among others.

The UK government has confirmed it will move forward on a major ex ante competition reform aimed at Big Tech, as it set out its priorities for the new parliamentary session earlier today.

However it has only said that draft legislation will be published over this period — booting the prospect of passing updated competition rules for digital giants further down the road.

At the same time today it confirmed that a “data reform bill” will be introduced in the current parliamentary session.

This follows a consultation it kicked off last year to look at how the UK might diverge from EU law in this area, post-Brexit, by making changes to domestic data protection rules.

There has been concern that the government is planning to water down citizens’ data protections. Details the government published today, setting out some broad-brush aims for the reform, don’t offer a clear picture either way — suggesting we’ll have to wait to see the draft bill itself in the coming months.

Read on for an analysis of what we know about the UK’s policy plans in these two key areas… 

Ex ante competition reform

The government has been teasing a major competition reform since the end of 2020 — putting further meat on the bones of the plan last month, when it detailed a bundle of incoming consumer protection and competition reforms.

But today, in a speech setting out prime minister Boris Johnson’s legislative plans for the new session at the state opening of parliament, it committed to publish measures to “create new competition rules for digital markets and the largest digital firms”; also saying it would publish “draft” legislation to “promote competition, strengthen consumer rights and protect households and businesses”.

In briefing notes to journalists published after the speech, the government said the largest and most powerful platform will face “legally enforceable rules and obligations to ensure they cannot abuse their dominant positions at the expense of consumers and other businesses”.

A new Big Tech regulator will also be empowered to “proactively address the root causes of competition issues in digital markets” via “interventions to inject competition into the market, including obligations on tech firms to report new mergers and give consumers more choice and control over their data”, it also said.

However another key detail from the speech specifies that the forthcoming Digital Markets, Competition and Consumer Bill will only be put out in “draft” form over the parliament — meaning the reform won’t be speeding onto the statue books.

Instead, up to a year could be added to the timeframe for passing laws to empower the Digital Markets Unit (DMU) — assuming ofc Johnson’s government survives that long. The DMU was set up in shadow form last year but does not yet have legislative power to make the planned “pro-competition” interventions which policymakers intend to correct structural abuses by Big Tech.

(The government’s Online Safety Bill, for example — which was published in draft form in May 2021 — wasn’t introduced to parliament until March 2022; and remains at the committee stage of the scrutiny process, with likely many more months before final agreement is reached and the law passed. That bill was included in the 2022 Queen’s Speech so the government’s intent continues to be to pass the wide-ranging content moderation legislation during this parliamentary session.)

The delay to introducing the competition reform means the government has cemented a position lagging the European Union — which reached political agreement on its own ex ante competition reform in March. The EU’s Digital Markets Act is slated to enter into force next Spring, by which time the UK may not even have a draft bill on the table yet. (While Germany passed an update to its competition law last year and has already designated Google and Meta as in scope of the ex ante rules.)

The UK’s delay will be welcomed by tech giants, of course, as it provides another parliamentary cycle to lobby against an ex ante reboot that’s intended to address competition and consumer harms in digital markets which are linked to giants with so-called “Strategic Market Status”.

This includes issues that the UK’s antitrust regulator, the CMA, has already investigated and confirmed (such as Google and Facebook’s anti-competitive dominance of online advertising); and others it suspects of harming consumers and hampering competition too (like Apple and Google’s chokepoint hold over their mobile app stores).

Any action in the UK to address those market imbalances doesn’t now look likely before 2024 — or even later.

Recent press reports, meanwhile, have suggested Johnson may be going cold on the ex ante regime — which will surely encourage Big Tech’s UK lobbyists to seize the opportunity to spread self-interested FUD in a bid to totally derail the plan.

The delay also means tech giants will have longer to argue against the UK introducing an Australian-style news bargaining code — which the government appears to be considering for inclusion in the future regime.

One of the main benefits of the bill is listed as [emphasis ours]:

“Ensuring that businesses across the economy that rely on very powerful tech firms, including the news publishing sector, are treated fairly and can succeed without having to comply with unfair terms.”

“The independent Cairncross Review in 2019 identified an imbalance of bargaining power between news publishers and digital platforms,” the government also writes in its briefing note, citing a Competition and Markets Authority finding that “publishers see Google and Facebook as ‘must have’ partners as they provide almost 40 per cent of large publishers’ traffic”.

Major consumer protection reforms which are planned in parallel with the ex ante regime — including letting the CMA decide for itself when UK consumer law has been broken and fine violating platforms over issues like fake reviews, rather than having to take the slow route of litigating through the courts — are also on ice until the bill gets passed. So major ecommerce and marketplace platforms will also have longer to avoid hard-hitting regulatory action for failures to purge bogus reviews from their UK sites.

Consumer rights group, Which?, welcomed the government’s commitment to legislate to strengthen the UK’s competition regime and beef up powers to clamp down on tech firms that breach consumer law. However it described it as “disappointing” that it will only publish a draft bill in this parliamentary session.

“The government must urgently prioritise the progress of this draft Bill so as to bring forward a full Bill to enact these vital changes as soon as possible,” added Rocio Concha, Which? director of policy and advocacy, in a statement.

Data reform bill

In another major post-Brexit policy move, the government has been loudly flirting with ripping up protections for citizens’ data — or, at least, killing off cookie banners.

Today it confirmed it will move forward with ‘reforming’ the rules wrapping people’s data — just without being clear about the exact changes it plans to make. So where exactly the UK is headed on data protection still isn’t clear.

That said, in briefing notes on the forthcoming data reform bill, the government appears to be directing most focus at accelerating public sector data sharing instead of suggesting it will pass amendments that pave the way for unfettered commercial data-mining of web users.

Indeed, it claims that ensuring people’s personal data “is protected to a gold standard” is a core plank of the reform.

A section on the “main benefits” of the reform also notably lingers on public sector gains — with the government writing that it will be “making sure that data can be used to empower citizens and improve their lives, via more effective delivery of public healthcare, security, and government services”.

But of course the devil will be in the detail of the legislation presented in the coming months. 

Here’s what else the government lists as the “main elements” of the upcoming data reform bill:

• Using data and reforming regulations to improve the everyday lives of people in the UK, for example, by enabling data to be shared more efficiently between public bodies, so that delivery of services can be improved for people.
• Designing a more flexible, outcomes-focused approach to data protection that helps create a culture of data protection, rather than “tick box” exercises.

Discussing other “main benefits” for the reform, the government touts increased “competitiveness and efficiencies” for businesses, via a suggested reduction in compliance burdens (such as “by creating a data protection framework that is focused on privacy outcomes rather than box-ticking”); a “clearer regulatory environment for personal data use” which it suggests will “fuel responsible innovation and drive scientific progress”; “simplifying the rules around research to cement the UK’s position as a science and technology superpower”, as it couches it; and ensuring the data protection regulator (the ICO) takes “appropriate action against organisations who breach data rights and that citizens have greater clarity on their rights”.

The upshot of all these muscular-sounding claims boils down to whatever the government means by an “outcomes-focused” approach to data protection vs “tick-box” privacy compliance. (As well as what “responsible innovation” might imply.)

It’s also worth mulling what the government means when it says it wants the ICO to take “appropriate” action against breaches of data rights. Given the UK regulator has been heavily criticized for inaction in key areas like adtech you could interpret that as the government intending the regulator to take more enforcement over privacy breaches, not less.

(And its briefing note does list “modernizing” the ICO, as a “purpose” for the reform — in order to “[make] sure it has the capabilities and powers to take stronger action against organisations who breach data rules while requiring it to be more accountable to Parliament and the public”.)

However, on the flip side, if the government really intends to water down Brits’ privacy rights — by say, letting businesses overrule the need to obtain consent to mine people’s info via a more expansive legitimate interest regime for commercial entities to do what they like with data (something the government has been considering in the consultation) — then the question is how that would square with a top-line claim for the reform ensuing “UK citizens’ personal data is protected to a gold standard”?

The overarching question here is whose “gold standard” the UK is intending to meet? Brexiters might scream for their own yellow streak — but the reality is there are wider forces at play once you’re talking about data exports.

Despite Johnson’s government’s fondness for ‘Brexit freedom’ rhetoric, when it comes to data protection law the UK’s hands are tied by the need to continue meeting the EU’s privacy standards, which require the an equivalent level of protection for citizens’ data outside the bloc — at least if the UK wants data to be able to flow freely into the country from the bloc’s ~447M citizens, i.e. to all those UK businesses keen to sell digital services to Europeans. 

This free flow of data is governed by a so-called adequacy decision which the European Commission granted the UK in June last year, essentially on account that no changes had (yet) been made to UK law since it adopted the bloc’s General Data Protection Regulation (GDPR) in 2018 by incorporating it into UK law.

And the Commission simultaneously warned that any attempt by the UK to weaken domestic data protection rules — and thereby degrade fundamental protections for EU citizens’ data exported to the UK — would risk an intervention. Put simply, that means the EU could revoke adequacy — requiring all EU-UK data flows to be assessed for legality on a case-by-case basis, vastly ramping up compliance costs for UK businesses wanting to import EU data.

Last year’s adequacy agreement also came with a baked in sunset clause of four years — meaning it will be up for automatic review in 2025. Ergo, the amount of wiggle room the UK government has here is highly limited. Unless it’s truly intent on digging ever deeper into the lunatic sinkhole of Brexit by gutting this substantial and actually expanding sunlit upland of the economy (digital services).

The cost — in pure compliance terms — of the UK losing EU adequacy has been estimated at between £1BN-£1.6BN. But the true cost in lost business/less scaling would likely be far higher.

The government’s briefing note on its legislative program itself notes that the UK’s data market represented around 4% of GDP in 2020; also pointing out that data-enabled trade makes up the largest part of international services trade (accounting for exports of £234BN in 2019).

It’s also notable that Johnson’s government has never set out a clear economic case for tearing up UK data protection rules.

The briefing note continues to gloss over that rather salient detail — saying that analysis by the Department for Digital, Culture, Media and Sport (DCMS) “indicates our reforms will create over £1BN in business savings over ten years by reducing burdens on businesses of all sizes”; but without specifying exactly what regulatory changes it’s attaching those theoretical savings to.

And that’s important because — keep in mind — if the touted compliance savings are created by shrinking citizens’ data protections that risks the UK’s adequacy status with the EU — which, if lost, would swiftly lead to at least £1BN in increased compliance costs around EU-UK data flows… thereby wiping out the claimed “business savings” from ‘less privacy red tape’.

The government does cite a 2018 economic analysis by DCMS and a tech consultancy, called Ctrl-Shift, which it says estimated that the “productivity and competition benefits enabled by safe and efficient data flows would create a £27.8BN uplift in UK GDP”. But the keywords in that sentence are “safe and efficient”; whereas unsafe EU-UK data flows would face being slowed and/or suspended — at great cost to UK GDP…

The whole “data reform bill” bid does risk feeling like a bad-faith PR exercise by Johnson’s thick-on-spin, thin-on-substance government — i.e. to try to claim a Brexit ‘boon’ where there is, in fact, none.

See also this “key fact” which accompanies the government’s spiel on the reform — claiming:

“The UK General Data Protection Regulation and Data Protection Act 2018 are highly complex and prescriptive pieces of legislation. They encourage excessive paperwork, and create burdens on businesses with little benefit to citizens. Because we have left the EU, we now have the opportunity to reform the data protection framework. This Bill will reduce burdens on businesses as well as provide clarity to researchers on how best to use personal data.”

Firstly, the UK chose to enact those pieces of legislation after the 2016 Brexit vote to leave the EU. Indeed, it was a Conservative government (not led by Johnson at that time) that passed these “highly complex and prescriptive pieces of legislation”.

Moreover, back in 2017, the former digital secretary Matt Hancock described the EU GDPR as a “decent piece of legislation” — suggesting then that the UK would, essentially, end up continuing to mirror EU rules in this area because it’s in its interests to do so to in order to keep data flowing.

Fast forward five years and the Brexit bombast may have cranked up to Johnsonian levels of absurdity but the underlying necessity for the government to “maintain unhindered data flows”, as Hancock put it, hasn’t gone anywhere — or, well, assuming ministers haven’t abandoned the idea of actually trying to grow the economy.

But there again the government lists creating a “pro-growth” (and “trusted”) data protection framework as a key “purpose” for the data reform bill — one which it claims can both reduce “burdens” for businesses and “boosts the economy”. It just can’t tell you how it’ll pull that Brexit bunny out of the hat yet.

Shopify put a spotlight on the role and significance of logistics and fulfillment in e-commerce when it snapped up Deliverr for $2.1 billion last week to gain its own, direct foothold into providing those services for its e-commerce customers a la Amazon. Now, an up and coming startup in fulfillment in Europe has closed a round of funding to fuel its own growth. Byrd, which is building a network of operations providing warehousing, delivery services and software for its e-commerce customers to manage it all, has raised $56 million in a Series C round of funding.

Cambridge Capital is leading the investment, with Speedinvest, Mouro Capital, Elevator Ventures and other previous shareholders also participating. Byrd last raised less than a year ago, a $19 million round led by Mouro. It’s not disclosing its valuation, but the round was closed between rumors of Shopify shopping for a logistics provider (apparently it had also considered Shipbob) and actually getting acquired, so that may have given Byrd some extra attention.

The Berlin-based startup today provides e-commerce customers with “virtual” warehousing in seven countries in Europe — not as a warehouse owner but by taking colocation space in other’s warehouses — along with a suite of software that helps those customers connect with, manage and analyze shipments and deliveries worldwide — and the plan is to use the investment to expand that network and the services that it provides around it, specifically also to build out the operations to work in new verticals like apparel. Today it covers the UK, France, Germany, the Netherlands, and Austria, and its newest warehouses added in Italy and Spain. Sweden, Denmark, and Poland are on the list to launch later this year, totaling 30 warehouse locations in 10 countries.

Byrd’s holy grail, so to speak, is to give its retailers a viable alternative to the kinds of services that one might potentially get via Amazon Prime: fast shipping options, but also a backend to manage the products after they are imported and until they get to their final destination with a customer; and an easy route for returns when those happen. It has a prime opportunity, so to speak, in the fact that merchants today typically are already selling through multiple channels, including their own websites, other marketplaces, and more.

“We already fulfill a ton of Amazon orders,” said Alexander Leichter, the CEO who co-founded Byrd with Sebastian Mach and Petra Dobrocka. “Why wouldn’t they ship through Amazon? Merchants like to be independent and have choice, and consolidate operations between different channels. So it’s not true now and it won’t be true in the future that Amazon is the best solution. There is still a vast opportunity for independent solutions.”

Logistics and fulfillment are two of the most deceptively critical parts of the e-commerce business model. Deceptive, because they don’t appear as visible to the average consumer buying a product; critical, because they have become central not just to the margins made on sales, but also a key differentiator when someone is buying something: delivery costs and time can make or break a sale.

Byrd, which was originally founded in Vienna, has been pecking away at the complexities of the business model for years, originally aiming to build its own network of physical warehouses before turning to a software-led approach based around scaling up and down warehouse space as it needed it for customers.

Dobrocka, the chief commercial officer, said that while the Deliverr acquisition most certainly speaks to more consolidation to come in the 3PL (short for third-party logistics) space, and perhaps also underscores that there might be less “3”‘s among them as e-commerce platforms flex their muscle, retailers are still a substantial enough population that there remains a place for providers like Byrd that are both flexible and evolving in functionality due to being software-based. And regional reach is not to be underestimated.

“Shopify only launched three or four years ago in Germany, and I’d say their coverage in Europe is not that strong,” she said.

The company hasn’t yet launched but has considered how to bring its Amazon-competing model to the very concept of Prime itself, if it manages to achieve more scale to make it worthwhile. (Something that Shopify is perhaps considering, too, given its growth and ambitions.)

“There are some thoughts around ‘prime,'” said Leichter. “It’s something that makes sense. For consumers, they might shop from more than one merchant, and say we have two merchants that sit in same warehouse but they order through different websites. It would make sense to combine those and better customer experience. But it would be premature to do this yet. We need a lot of merchants to get there.”

That scale is something that Amazon itself has not only reached with business on its own marketplace but well beyond it. The company has been offering FBA (Fulfillment by Amazon) for years at this point and in April launched Buy with Prime, a new front in its Prime model that will see Amazon offering it as a payment option to Prime members on the sites of merchants themselves, and likely in other places too over time. This is something Amazon had been working on for years prior, a mark of just how complex something like this is to implement in terms of bringing on partners and making the whole process cost-effective. Notably, even in its launch it’s starting small working with customers who already work with Amazon already (and likely use its warehousing, for a start, making the onboarding easier).

All of that may look like daunting competition in one respect, but in another it’s an opportunity because there will remain companies that do not want to lock into the Amazon ecosystem, and it leaves a lot of room for more flexible and innovative approaches for smaller players. And notably Buy with Prime is currently only being rolled out in the U.S..

Matt Smalley, a principal at Cambridge Capital, is joining the company’s board with this round.

“Byrd is one of the fastest-growing companies we have seen, at what we think are the strongest unit economics in the industry. We were convinced by their tech-driven approach and proprietary warehouse management software, which enables byrd to run an asset-light fulfillment network,” he said in a statement. “Byrd’s broad coverage of the European market, excellent customer momentum and strong satisfaction with both retailers and warehouse partners appealed to us right away.”

Stripe, the payments behemoth valued at $95 billion a year ago and now reportedly inching closer to an IPO, today announced a new product that fills in some significant gaps in its play to be the financial services layer for merchants and other businesses whose models are based on enabling transactions. It’s taking the wraps off Financial Connections, which will let Stripe’s customers connect directly to their customer’s bank accounts, to access financial data to speed up or run certain kinds of transactions.

These include verifying accounts for payments and payouts; to check balances ahead of a payment being made to ensure there’s enough money there; to confirm account ownership. Details like these can in turn be used to help underwrite risk for loans; to track spending patterns and automatically pay bills; and more — in other words, financial data that’s useful or necessary to run financial transactions over other Stripe services like Stripe Connect, ACH payments, or Stripe Capital-powered loans.

On the part of customers of Stripe’s customers, when asked, they will input their bank account details and get specific information on how that will be used, Stripe said. (Side note: it will be interesting to see whether U.S. consumers happy with sharing that information in situations where it hasn’t been previously.)

The service is going live first in the U.S., where Stripe said it will work with over 90% of all bank accounts. It will be charged on a pay-as-you-use basis — bank account verifications and account information will come at $1.50 per API call; account balance retrieval is 10 cents per API call; transaction pulls have yet to be launched so pricing is TBA — and bigger customers can buy on an enterprise contract.

We asked but Stripe declined to comment on on when and if Financial Connections would be extended to other markets, which is perhaps not a surprise, given how much banking systems differ country to country.

Financial Connections is coming at an interesting moment in the world of digital payments. E-commerce definitely created a market for enabling easier payments online. And while that opened the door to digital wallets like PayPal’s and some direct payments from banks in some countries, lot of the spoils of that growth has been passed into services based around card payment rails.

But as the space has evolved, we’ve seen an ever greater proliferation of technology, services, regulations, and consumer appetite for more than that. Digital banking, investing, cryptocurrency trading, new approaches to getting loans, managing expenses — all of these and more are examples of how digital services have gotten more sophisticated, and the demands we have from them have, too. (And e-commerce has also not stood still: buy now pay later services and a lot more have also entered that world to create more flexible services to net more transactions amid tighter competition and thinner margins.)

There are more of these popping up all the time. Just yesterday, I wrote about an interesting startup called Kevin (okay, kevin.) that’s building a whole new set of payment rails and APIs for account-to-account payments that link straight into bank accounts, bypassing card rails and legacy account-to-account payment methods that are harder to implement.

In that context, Financial Connections is a timely tool for Stripe to launch. It’s part of the wave of new services (like Kevin) that are creating a more programmatic approach to digital transactions and related financial services. While companies would have been able to get, say, transaction data from a bank before, now that can be handled in a faster and more automated way.

“Businesses have been asking us for an easy, secure way to connect to and verify their customers’ bank accounts,” said Clara Liang, business lead at Stripe, in a statement. “Stripe Financial Connections delivers just that.”

Indeed, it speaks to the needs of its current customers; but importantly for Stripe, it creates a tighter ecosystem of services around products that are already being used by them, a one-stop-shop so that they do not need to tap other parties to integrate that functionality. Stripe has been making a number of acquisitions to bring in extra functionality into its platform to close up some of the gaps — for example almost exactly a year ago it acquired TaxJar to help automatically calculate sales tax and provide related tools to its customers — but it looks like Financial Connections was built in-house.

Stripe’s selling point for these tools, beyond a more seamless integration with its other products, is that it helps its customers make more transactions. It claims Connect customers that have already been working with the service have reduced payout failures by 75%; early Capital users are seeing 55% larger loan offers because of the extra data they’re using to inform decisions.

All of that means more transactions on Stripe’s platform itself. The margins might be thin on any digital payment — one reason why even a company that looks like it’s growing and doing a lot of business might still fail: the numbers need to be huge to work out in its profitable favor — but this is why so many payments companies work on vast scale, and why building in a number of extra valued-added services in hopes of them getting picked up by customers (and customers’ customers), as Stripe is doing here, is smart business, one way that it hopes to sustain itself for the long (and likely public) haul.

Payments remains a very fragmented business around the world: depending on where you’re buying or selling something (and whether you are selling online or offline) you will have different “standard” payment methods, currencies and settlement schemes and more. Today, a startup called Kevin that’s taking one piece of that puzzle — payments made from account to account, an alternative to payment card payments that bypasses those rails — and making it more easier and more ubiquitous to use through the development of whole new set of payments infrastructure that integrates directly with banks, is announcing a significant Series A of $65 million to double down on its business after some strong initial traction.

It has already picked up 6,000 merchants in 12 markets in Europe, starting first with electronic point of sale, and more recently with an integration with physical POS terminals. Its plan is to be available as a payment option across some 35% of European electronic point of sale terminals by the end of this year, and then 85% the year after that, “same as any card scheme,” said CEO Tadas Tamosiunas in an interview.

UK will be later this year but at the end of this year will be 35% of European EPOS terminals and then 85% next year same as card scheme.

The round is being led by Accel, with Eurazeo and previous backers OTB Ventures, Speedinvest, OpenOcean, and Global Paytech Ventures also participating. Harry Stebbings of 20VC; Ilkka Paananen, CEO & Co-founder of Supercell; and Amitabh Jhawar, ex-CEO of VenmoVilnius are some of the individuals also investing in the round. Kevin has now raised $77 million and it is not disclosing its valuation.

Lithuania-based Kevin was co-founded by Tamosiunas and Pavel Sokolovas (COO), who said in a joint interview that the plan will be to use the funding to continue building out its technology and to hire more people to break into more markets, starting first with covering all of Europe.

Kevin is technically styled “kevin.” — including the full stop. Tamosiunas said that the choice was made for a few reasons: first “Kevin” as an everyman name, the idea being that this is a technical payments solution that will be useful for everyone; second the full stop to imply that it’s the first and last name you’ll need to know in the business; but third, as a conversation opener. “It gives us an opportunity to tell our story,” he said simply.

That story is one that will be well known to merchants and others working in payments and commerce: every country has different payment systems at both the frontend and backend of the process. Account-to-account payments, which essentially debits money directly from the buyer and deposits it into the account of the seller, has long been one of those options, and often represents a much cheaper and direct alternative to card payments and the fees those incur, when someone isn’t already using cash.

The problem is that much of pre-existing account-to-account payments infrastructure is very clunky, not built around APIs, and thus hard to expand and integrate into any new services, both those in physical stories as well as those that are “electronic point of sale”, which might be in a store but could just as easily be in, for example, an app to pay for time at a parking lot.

“But account-to-account is a cheaper process and so we had a huge opportunity to solve that, especially in EPOS,” said Sokolovas. Years in the building, Kevin had a lot of naysayers initially, skeptical that APIs could be built to integrate with banks, which have traditionally been slow to embrace them and open up their services to others. There are exceptions, of course, such as the open banking efforts we’ve seen in the United Kingdom, but by and large it’s a fragmented and still-arcane area. “Now we are one and only company on the market that has a technical solution behind that.”

There are now other companies catching on — for example the POS terminal giant Worldline is working on a solution to accept account-to-account payments, Tamosiunas said, but it will take years to build, he claimed.

The bigger theme is that e-commerce remains a big and fast-growing area, but in the shift back to physical movement post-the peak of the Covid-19 pandemic, focus is also changing. “Everyone is looking how to improve sales offline, at the point of sale,” Tamosiunas added.

The disruption that Kevin is going for here is not just that it’s opening and modernizing a process that has been around for years, but has been hard to use; but it’s also giving merchants, consumers and everyone else involved in any transaction a more direct way of enabling a particular payment. Being more direct means it’s also cheaper, which is also a significant part of the pitch: it means that anyone opting for this option can make better margins on transactions. Conversely, it’s also cutting a lot of the traditional players in the payments ecosystem out of the equation, another kind of disruption.

That is what has caught the eye not just of investors but potential strategic partners and would-be acquirers of the startup. The founders wouldn’t go into detail about who has been knocking on their door but you could imagine other big players in payments tech old and new (including Stripe, Adyen, PayPal and maybe even the big credit card rail companies) might be among those interested in picking up this tech in a diversification play. For now, Kevin has declined even to work with them as strategic investors, in order to stay neutral and not tied to any specific platforms.

“Tadas, Pavel and the Kevin team are powering the future of payments with their next generation payments infrastructure,” noted Luca Bocchio, a partner at Accel, in a statement. “Offering a fast, seamless payment experience, with reduced costs and increased authentication rates, the time for A2A payments is now and Kevin has already had impressive momentum with its offering. With the launch of its unique POS payments product, the opportunity ahead is huge and we’re looking forward to partnering with the team on their journey.”

One interesting twist here will be whether and how Kevin and those like it will be integrated with mobile wallets.

Today Kevin operates in services when a merchant has integrated its tech into their own point of sale, whether it’s physical or electronic and in an app. But Wallets like Apple Pay or Google Pay today only work with cards. Given how so many card transactions are now being supplanted by NFC-based payments using people’s phones, it could potentially limit how much Kevin can grow if it cannot also offer an alternative to consumers to pay this way.

Coincidentally, Apple just yesterday was called out for anticompetitive practices by the EU over how it opens (or doesn’t as the case may be) its NFC-based wallet technology to other parties. That will be one to watch, and one that could have a big impact on how Kevin grows in future.

Ahead of the start of the 2022 IAB NewFronts, where media and entertainment companies pitch their upcoming offerings to advertisers, the industry group behind the multi-day show released its annual report on the state of the video advertising industry. According to its findings, digital video advertising grew 21% in 2021 and is expected to grow another 26% in 2022 to reach $49.2 billion.

Leading this growth is the Connected TV ad market — an indication of the sizable shift away from traditional TV viewing and toward streaming video. The “2021 Video Ad Spend and 2022 Outlook” report says Connected TV ad spend grew 57% in 2021 to $15.2 billion and will grow another 39% in 2022 to $21.2 billion. And between 2020 and 2022, Connected TV ad spend is projected to more than double, growing 118%. The IAB says that despite these figures, the ad industry hasn’t caught up to where viewers are paying the most attention.

Specifically, it notes that Connected TV viewing will account for 36% of the total time spent with both linear TV and Connected TV combined in 2022, the amount of Connected TV ad spend is not in line with that figure. Instead, only 18% of the total video ad dollars are being committed to Connected TV, which includes Connected TV (CTV) viewing, linear, social, and short-form video.

“Digital video is a driving force for buyers and will continue to be in 2022,” said Eric John, VP, IAB Media Center, in a statement. “However, while CTV leads the substantial growth of digital video ad spend, the amount of dollars currently allocated to CTV is not proportionate to the amount of viewer time spent with the channel. The time is now for brands and buyers to follow consumer attention.”

Ad buyers are also facing an industry where there are many more services available to address, including ad-supported streamers like Hulu (with Ads), Peacock, Paramount+, and others, including, in more recent months, HBO Max, and Disney+ which announced plans. Plus, in a major turn of events, Netflix has just said it would introduce an ad-supported tier.

Of course, the IAB also has a vested interest in making Connected TV a larger part of the market, as it notes that brand advertisers can access additional data like location or shopping data when making Connected TV ad buys, as compared with linear. And 59% of ad buyers said it was “very clear” where their Connected TV ads ran, versus just 50% for social video and 43% for digital video.

However, the report acknowledged there are still challenges in the Connected TV market, including measuring incremental reach, managing frequency, and a lack of transparency and interoperability across platforms and publishers. It also pointed to the fragmentation of programmatic supply paths as another issue. But it said that nearly 9 out of 10 (88%) of ad buyers are anticipating a coverage of linear TV and Connected TV in the years ahead.

At Snap’s Partner Summit on Thursday, the Snapchat maker announced a number of new initiatives focused on using its AR technology to aid with online shopping. Most notably, the company is introducing a new in-app destination within Snapchat called “Dress Up” that will feature AR fashion and virtual try-on experiences, and it’s launching tools that will allow retailers to integrate with Snapchat’s AR shopping technology within their own websites and apps, among other updates designed to ease the process of AR asset creation.

The company has been making strides with AR-powered e-commerce over the past year, having given its computer vision-based “Scan” feature a more prominent placement inside the Camera section of the app and upgrading it with commerce capabilities. Earlier in 2022, Snap also rolled out support for real-time pricing and product details to enhance its AR shopping listings.

These improvements have yielded increased consumer engagement with AR commerce, Snap says. Since January 2021, more than 250 million Snapchat users have engaged with AR shopping Lenses more than 5 billion times, the company notes.

Today, Snap announced it will put AR technology more directly into retailers’ own hands by allowing them to use Snap’s AR try-on technology within their own mobile apps and websites, with Camera Kit for AR Shopping.

This AR SDK (software development kit) will bring catalog-powered shopping lenses into the retailer’s own product pages to allow their customers to virtually try on their clothing, accessories, shoes and more. At launch, the feature works on iOS and Android apps, but Snap says it will work “soon” on websites, as well.

Its first global partner to use the technology is Puma, which will allow shoppers to virtually try on its sneakers using the Camera Kit integration. Shoppers would simply point their phone at their feet to see the sneakers they’re considering appear in an AR view.

Retailers will also gain access to a new AR Image Processing technology in Snap’s 3D asset manager, which Snap says will make it easier and faster to build augmented reality shopping experiences. Through a web interface, brands will be able to select their product SKUs and then turn them into Shopping Lenses, allowing them to create new Lenses in seconds, and for no additional cost, Snap claims.

To do so, partners will upload their existing product photography for the SKUs they sell, which Snap’s tech will then process using a deep-learning module that turns them into AR Image assets. This process uses AI to segment the garment from the brand’s model photography, essentially turning standard photos into AR assets.

These assets can then be used to create new try-on Lenses which can be used by shoppers at home who take a full-body selfie photo.

Virtual try-on using full-body images. Image Credits: Snap

The company is also adding new AR Shopping templates in its Lens Web Builder to turn those assets into Lense more quickly, without the need to understand AR development. Select partners in apparel, eyewear and footwear can try this out in beta today, and Snap will later expand the feature to include furniture and handbags.

Related to this, Snap is giving AR shopping a bigger spot within its own app for consumers.

Snapchat will introduce a new in-app destination called “Dress Up,” where users can browse and discover new try-on experiences from creators, retailers and fashion brands in one place. “Dress Up” will be first available in Lens Explorer, but will soon be added one tap away from the Camera in the AR Bar.

Snap’s Dress Up feature. Image Credits: Snap

Users will be able to return to outfits and other products they liked by navigating to a new shopping section from within their Profile, where they can view the items they’ve favorited, recently viewed and added to a cart.

As another example, Snap says that Zenni Optical’s AR Lenses have been tried on over 60 million times by users, and Lenses that used Snap’s “true size” technology were shown to have driven a 42% higher return on ad spend compared to Lenses without the feature.

Finally, in the realm of virtual fashion, Snap’s Bitmoji is getting an update, too. There are now over 1 billion of these mini avatars created to date, which people like to dress up in virtual fashion items. Snap says fashion brand partners will now be able to drop “Limited Edition” fashion items for Bitmoji exclusively for Snapchat users.

Online payment methods can be expensive for merchants, who have to pay between 2% and 8% of every sale to debit and credit card, ewallet and BNPL facilitators. Much of this is often passed to consumers. Fast was a hugely well-funded startup that tried to address this by closed in spectacular fashion just recently. Other examples tackling the issue include Rapyd and Checkout.com, Bolt.

Volume, is a new checkout startup that has now closed a pre-seed round of $2.4 million led by firstminute Capital and joined by SeedX and Haatch Ventures. Obviously tiny compared to Fast’s $102 million Series B…

Volume’s take on this checkout market is – it says – about making the checkout process shorter and reducing associated fees. It does this by using the Variable Recurring Payment mandate and also employs biometric security to finalize the purchase.

Simone Martinelli, founder and CEO at Volume, says: “Instead of yet another one-click checkout, Volume is building the world’s first-ever transparent checkout. Ecommerce has a ‘hidden tax’ in the form of payment commissions to cards and ewallets, and consumers don’t know this ultimately impacts on the prices they pay. We want to finally bring transparency to this enormous market and kill all hidden fees.”
Volume was founded by Simone Martinelli and Krzysztof Tarnawski, who spent the last 10 years working at Level39, Mastercard, HSBC and WorldRemit.

The startup says it has 50 merchants across retail, food delivery and digital marketplaces in the UK.

The fintech will use the new funding to expand its UK business, before it looks towards the rest of Europe and North America.

Arek Wylegalski, Partner at firstminute Capital, commented: “Volume is seizing the opportunity created by open banking to enable a new, improved ecommerce payment experience. The high interchange fees that have long been regarded as normal in this $5 trillion market are finally about to disappear. Having backed Revolut at a similar stage in the past, I believe in Krzysztof’s and Simone’s unique mix of fintech know-how, technical talent, relentless customer focus and ambition to get the job done.”

Other participants in the funding round include angels Christian Faes (LendInvest), Russ Carroll (ex-Klarna), as well as angels from MADE.COM, Mastercard, Visa and American Express.

Synthetically generated versions of real people that can be can be programmed to say anything sounds like a scenario from the latest episode of “Black Mirror.”

But in fact, production-grade video-based characters based on real people — which can talk about any product or subject at all, in a hyperlifelike manner — are arguably going to be part of the next wave in areas like e-commerce and remote learning. Further, a Hollywood celebrity could simply license out their avatar to explain products, at a scale that would make it impossible to physically film. But perhaps more realistically, “digital twins” like this make much more convincing videos than invented characters, because of their humanlike qualities.

The market for this technology is expanding. Key players in the space include SoulMachines (which has raised $135 million) and Synthesia (raised $66.6 million).

Back in 2020 we reported how Hour One, a New York and Tel Aviv startup which creates AI-driven synthetic characters based on real humans, had closed a $5 million seed funding round.

It’s now raised a $20 million Series A funding round led by Insight Partners. Also participating in the round was Galaxy Interactive, Remagine Ventures, Kindred Ventures, Semble Ventures, Cerca Partners, Digital-Horizon and Eynat Guez.

The startup plans to expand its Reals platform, a self-service platform allowing businesses “to create human-led video automatically, from just text, in a matter of minutes” said the company in a statement.

This, says the firm, converts people into virtual human characters for commercial and professional use cases. The human is first captured on video, then Hour One’s AI generates a virtual twin. This could be a virtual receptionist, salesperson, HR representative or language teacher, for example.

To some extent, Hour Pen’s view that the shift to remote work has meant video and more immersive media — such as for educational content — has become much more important, is correct. Therefore this kind of video people will be expanded.

Hour One CEO and Founder Oren Aharon said in a statement: “Very soon, any person will be able to have a virtual twin for professional use that can deliver content on their behalf, speak in any language, and scale their productivity in ways previously unimaginable.”

“The power and accuracy of generative AI continues to improve at an extremely rapid pace, and Hour One is at the vanguard,” added Lonne Jaffe, managing director at Insight Partners. “You just type in some text, and behind the scenes the incredibly scalable Hour One infrastructure creates a fluid and realistic video of an avatar talking along with matching voice and graphics. The team’s grand vision is to be able to embed this extraordinary capability within any software product or allow it to be invoked in real-time via API.”

Berlitz, the language and culture training giant, now uses Hour One to generate video, featuring virtual instructors across thousands of its videos. Hour One has also partnered with NBCUniversal, DreamWorks and Cameo, the latter of which allows celebrities to record paid videos for fans.

The appearance of the likes of SoulMachines, Synthesia and Hour One raises questions about how this technology might well also be abused. Watermarking videos as “artificial” might be one way to prevent this, but we are still swimming in uncharted waters here. Hour One says it has an ethical policy code for how its technology is used.

We are definitely going to see some “interesting” scenarios appear around this technology, which is proliferating much faster than the startups themselves.

In the small hours local time, European Union lawmakers secured a provisional deal on a landmark update to rules for digital services operating in the region — grabbing political agreement after a final late night/early morning of compromise talks on the detail of what is a major retooling of the bloc’s existing ecommerce rulebook.

The political agreement on the Digital Services Act (DSA) paves the way for formal adoption in the coming weeks and the legislation entering into force — likely later this year. Although the rules won’t start to apply until 15 months after that — so there’s a fairly long lead in time to allow companies to adapt.

The regulation is wide ranging — setting out to harmonize content moderation and other governance rules to speed up the removal of illegal content and products. It addresses a grab-bag of consumer protection and privacy concerns, as well as introducing algorithmic accountability requirements for large platforms to dial up societal accountability around their services. While ‘KYC’ requirements are intended to do the same for online marketplaces.

How effective the package will be is of course tbc but the legislation that’s was agreed today goes further than the Commission proposal in a number of areas — with, for example, the European Parliament pushing to add in limits on tracking-based advertising.

A prohibition on the use of so-called ‘dark patterns’ for online platforms is also included — but not, it appears, a full blanket ban for all types of digital service (per details of the final text shared with TechCrunch via our sources).

See below for a fuller breakdown of what we know so far about what’s been agreed. 

The DSA was presented as a draft proposal by the Commission back in December 2020 which means it’s taken some 16 months of discussion — looping in the other branches of the EU: the directly elected European Parliament and the Council, which represents EU Member States’ governments — to reach this morning’s accord.

After last month’s deal on the Digital Markets Act (DMA), which selectively targets the most powerful intermediating platforms (aka gatekeepers) with an ex ante, pro-competition regime, EU policy watchers may be forgiven for a little euphoria at the (relative) speed with which substantial updates to digital rules are being agreed.

Big Tech’s lobbying of the EU over this period has been of an unprecedented scale in monetary terms. Notably, giants like Google have also sought to insert themselves into the ‘last mile’ stage of discussions where EU institutions are supposed to shut themselves off from external pressures to reach a compromise, as a report published earlier today by Corporate Europe Observatory underlines. That illustrates what they believe is at stake.

The full impact of Google et al‘s lobbying won’t be clear for months or even years. But, at the least, Big Tech’s lobbyists were not success in entirely blocking the passage of the two major digital regulations — so the EU is saved from an embarrassing repeat of the (stalled) ePrivacy update which may indicate that regional lawmakers are wising up to the tech industry’s tactics. Or, well, that Big Tech’s promises are not as shiny and popular as they used to be.

The Commission’s mantra for the DSA has always been that the goal is to ensure that what’s illegal offline will be illegal online. And in a video message tweeted out in the small hours local time, a tired but happy looking EVP, Margrethe Vestager, said it’s “not a slogan anymore that’s what illegal offline should also be seen and dealt with online”.

“Now it is a real thing,” she added. “Democracy’s back.”

In a statement, Commission president Ursula von der Leyen added:

“Today’s agreement on the Digital Services Act is historic, both in terms of speed and of substance. The DSA will upgrade the ground-rules for all online services in the EU. It will ensure that the online environment remains a safe space, safeguarding freedom of expression and opportunities for digital businesses. It gives practical effect to the principle that what is illegal offline, should be illegal online. The greater the size, the greater the responsibilities of online platforms. Today’s agreement — complementing the political agreement on the Digital Markets Act last month — sends a strong signal: to all Europeans, to all EU businesses, and to our international counterparts.”

In its own press release, the Council called the DSA “a world first in the field of digital regulation”.

While the parliament said the “landmark rules… effectively tackle the spread of illegal content online and protect people’s fundamental rights in the digital sphere”.

In a statement, its rapporteur for the file, MEP Christel Schaldemose, further suggested the DSA will “set new global standards”, adding: “Citizens will have better control over how their data are used by online platforms and big tech-companies. We have finally made sure that what is illegal offline is also illegal online. For the European Parliament, additional obligations on algorithmic transparency and disinformation are important achievements. These new rules also guarantee more choice for users and new obligations for platforms on targeted ads, including bans to target minors and restricting data harvesting for profiling.”

Other EU lawmakers are fast dubbing the DSA a “European constitution for the Internet”. And it’s hard not to see the gap between the EU and the US on comprehensive digital lawmaking as increasingly gaping.

Vestager’s victory message notably echoes encouragement tweeted out earlier this week by the former US secretary of state, senator, first lady and presidential candidate, Hillary Clinton, who urged Europe to get the DSA across the line and “bolster global democracy before it’s too late”, as she put it, adding: “For too long, tech platforms have amplified disinformation and extremism with no accountability. The EU is poised to do something about it.”

DSA: What’s been agreed?

In their respective press releases trumpeting the deal, the parliament and Council have provided an overview of areas of key elements of the regulation they’ve agreed.

It’s worth emphasizing that the full and final text hasn’t been published yet — and won’t be for a while. It’s pending legal checks and translation into the bloc’s many languages — which means the full detail of the regulation and the implication of all its nuance remains tbc.

But here’s an overview of what we know so far…

Scope, supervision & penalties

On scope, the Council says the DSA will apply to all online intermediaries providing services in the EU.

The regulation’s obligations are intended to be proportionate to the nature of the services concerned and the number of users — with extra, “more stringent” requirements for “very large online platforms” (aka VLOPs) and very large online search engines (VLOSEs).

Services with more than 45M monthly active users in the EU will be considered VLOPs or VLOSEs. So plenty of services will reach that bar — including, for example, the homegrown music streaming giant Spotify.

“To safeguard the development of start-ups and smaller enterprises in the internal market, micro and small enterprises with under 45 million monthly active users in the EU will be exempted from certain new obligations,” the Council adds.

The Commission itself will be responsible for supervising VLOPs and VLOSEs for the obligations that are specific to them — which is intended to avoid bottlenecks in oversight and enforcements of larger platforms (such as happened with the EU’s GDPR).

But national agencies at the Member State level will supervise the wider scope of the DSA — so EU lawmakers say this arrangement maintains the country-of-origin principle that’s baked into existing digital rules.

Penalties for breaches of the DSA can scale up to 6% of global annual turnover.

Per the parliament, there will also be a right for recipients of digital services to seek redress for any damages or loss suffered due to infringements by platforms.

Content moderation & marketplace rules

The content moderation measures are focused on harmonizing rules to ensure “swift” removal of illegal content.

This is being done through what the parliament describes as a “clearer ‘notice and action’ procedure” — where “users will be empowered to report illegal content online and online platforms will have to act quickly”, as it puts it.

It also flags support for victims of cyber violence — who it says will be “better protected especially against non-consensual sharing (revenge porn) with immediate takedowns”.

MEPs say fundamental rights are protected from the risk of over-removal of content from the regulation putting pressure on platforms to act quickly through “stronger safeguards to ensure notices are processed in a non-arbitrary and non-discriminatory manner and with respect for fundamental rights, including the freedom of expression and data protection”.

The regulation is also intended to ensure swift removal of illegal products/services from online marketplaces. So there are new  requirements incoming for ecommerce players.

On this, the Council says the DSA will impose a “duty of care” on marketplaces vis-à-vis sellers who sell products or services on their online platforms.

“Marketplaces will in particular have to collect and display information on the products and services sold in order to ensure that consumers are properly informed,” it notes, although there will be plenty of devil in the detail of the exact provisions.

On this, the parliament says marketplaces will “have to ensure that consumers can purchase safe products or services online by strengthening checks to prove that the information provided by traders is reliable (‘Know Your Business Customer’ principle) and make efforts to prevent illegal content appearing on their platforms, including through random checks”.

Random checks on traders/goods had been pushed for by consumer protection organizations — who had been concerned the measure would be dropped during trilogues — so EU lawmakers appear to have listened to those concerns.

Extra obligations for VLOPs/VLOSEs

These larger platform entities will face scrutiny of how their algorithms work from the European Commission and Member State agencies — which the parliament says will both have access to the algorithms of VLOPs.

The DSA also introduces an obligation for very large digital platforms and services to analyse “systemic risks they create” and to carry out “risk reduction analysis”, per the Council.

The analysis must be done annually — which the Council suggests will allow for monitoring of and reduced risks in areas such as the dissemination of illegal content; adverse effects on fundamental rights; manipulation of services having an impact on democratic processes and public security; adverse effects on gender-based violence, and on minors and serious consequences for the physical or mental health of users.

Additionally, VLOPs/VLOSEs will be subject to independent audits each year, per the parliament.

Large platforms that use algorithms to determine what content users see (aka “recommender systems”) will have to provide at least one option that is not based on profiling. Albeit, many already do — although they often also undermine these choices by applying dark pattern techniques to nudge users away from control over their feeds so holistic supervision will be needed to meaningfully improve user agency.

There will also be transparency requirements for the parameters of these recommender systems with the goal of improving information for users and any choices they make. Again, the detail will be interesting to see there.

Limits on targeted advertising  

Restrictions on tracking-based advertising appear to have survived the trilogue process with all sides reaching agreement on a ban on processing minors’ data for targeted ads.

This applies to platforms accessible to minors “when they are aware that a user is a minor”, per the Council.

“Platforms will be prohibited from presenting targeted advertising based on the use of minors’ personal data as defined in EU law,” it adds.

A final compromise text shared with TechCrunch by our sources suggests the DSA will stipulate that providers of online platforms should not do profile based advertising “when they are aware with reasonable certainty that the recipient of the service is a minor”.

A restriction on the use of sensitive data for targets ads has also made it into the text.

The parliament sums this up by saying “targeted advertising is banned when it comes to sensitive data (e.g. based on sexual orientation, religion, ethnicity)”.

The wording of the final compromise text which we’ve seen states that: “Providers of online platforms shall not present advertising to recipients of the service based on profiling within the meaning of Article 4(4) of Regulation 2016/679 [aka, the GDPR] using special categories of personal data as referred to in article 9(1) of Regulation 2016/679.”

Article 4(4) of the GDPR defines ‘profiling’ as: “any form of automated processing of personal data consisting of the use of personal data to evaluate certain personal aspects relating to a natural person, in particular to analyse or predict aspects concerning that natural person’s performance at work, economic situation, health, personal preferences, interests, reliability, behaviour, location or movements;”.

While the GDPR defines special category data as personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, or trade union membership, as well as biometric and health data, data on sex life and/or sexual orientation.

So targeting ads based on tracking or inferring users’ sensitive interests is — on paper — facing a hard ban in the DSA.

Ban on use of dark patterns

A prohibition on dark patterns also made it into the text. But, as we understand it, this only applies to “online platforms” — so it does not look like a blanket ban across all types of apps and digital services.

That is unfortunate. Unethical practices shouldn’t be acceptable no matter the size of the business.

On dark patterns, the parliament says: “Online platforms and marketplaces should not nudge people into using their services, for example by giving more prominence to a particular choice or urging the recipient to change their choice via interfering pop-ups. Moreover, cancelling a subscription for a service should become as easy as subscribing to it.”

The wording of the final compromise text that we’ve seen says that: “Providers of online platforms shall not design, organize or operate their online interfaces in a way that deceives, manipulates or otherwise materially distorts or impairs the ability of recipients of their service to make free and informed decisions” — after which there’s an exemption for practices already covered by Directive 2005/29/EC [aka the Unfair Commercial Practices Directive] and by the GDPR.

The final compromise text we reviewed further notes that the Commission may issue guidance on specific practices — such as platforms giving more prominence to certain choices, repeatedly requesting a user makes a choice after they already have and making it harder to terminate a service than sign up. So the effectiveness of the dark pattern ban could well come down to how much attention the Commission is willing to give to a massively widespread online problem.

The wording of the associated recital in the final compromise we saw also specifies that the dark pattern ban (only) applies for “intermediary services”.

Crisis mechanism 

An entirely new article was also added to the DSA following Russia’s invasion of Ukraine — and in connection with rising concern around the impact of online disinformation — that creates a crisis response mechanism which will give the Commission extra powers to scrutinize VLOPs/VLOSEs in order to analyze the impact of their activities to the crisis in question.

The EU’s executive will also be able to come up with what the Council bills as “proportionate and effective measures to be put in place for the respect of fundamental rights”.

The mechanism will be activated by the Commission on the recommendation of the board of national Digital Services Coordinators.

We talk about bulls in china shops, but what about bulls running through the streets of entire shopping districts, or other neighborhoods? This morning, Amazon unveiled a new feature that will test just how much of a bull it can be online — beyond its own china shop, so to speak.

Prime — its membership-based scheme that provides free and fast shipping options on a number of products sold on Amazon, alongside a number of other perks like Amazon’s streamed video and music services, used by more than 200 million consumers — is now officially stepping outside of the walls of Amazon itself. Buy with Prime, as the service is officially called, will see Prime members get to extend those Prime benefits — specifically fast and free delivery, free returns, and a seamless checkout experience — to participating third-party merchants on their own sites and apps.

There is no guarantee that this will be a big hit for Amazon. Alexa was huge for the company, and Prime on Amazon itself has been, too. But don’t forget the Fire Phone, or Amazon’s foray into restaurant delivery, or other projects that have been killed over the years.

Be that as it may, there is a giant amount of potential here for the company, so it’s worth spelling out what is going on, some of the context behind this launch (and what that means), and what it’s giving Amazon that it hasn’t had before, and why that matters.

First, the basics

Buy with Prime is starting with merchants that are already using Fulfillment By Amazon (FBA) — which, like Amazon Pay, is an Amazon feature that had already been available outside of Amazon.com and merchants use to outsource shipping and logistics.

Amazon said it will be rolling out to these retailers throughout the rest of this year, and as 2022 progresses it will also be extended to those no already using FBA or selling with Amazon on an invitation basis.

Users look for the Prime logo on these other online stores to find and use the service. Merchants meanwhile integrate by signing up, linking in their Amazon Seller Central accounts, Multi-Channel Fulfillment, and Amazon Pay; and then installing a JavaScript widget. Merchants get access to order data — but Amazon does, too (more on that below).

The whole service is run on a similar idea to AWS, based on SaaS pricing covering a service fee, a payment processing fee, a fulfillment fee and a storage fee — all calculated per unit. “Merchants pay only for what they use,” Amazon writes. “Merchants can expand selection or cancel at any time.”

Amazon is playing this as more convenience and another perquisite for Prime subscribers.

“We always aim to exceed Prime members’ expectations by offering more selection, exclusive deals, quality content, and convenient features,” said Jamil Ghani, VP of Amazon Prime, in a canned statement in Amazon’s official announcement. “With the introduction of Buy with Prime, we’re expanding where members can enjoy trusted and convenient Prime shopping benefits beyond Amazon, adding even more value to their membership. Members will have the flexibility to shop from merchants directly, all while enjoying the fast, free delivery, seamless checkout, and easy returns they’ve come to know and love from Amazon.”

It’s also touting it as part of its strategy to build B2B tools, aimed at merchants selling online.

“For over 20 years, we’ve been empowering small and medium-sized businesses with opportunities to grow,” said Peter Larsen, Amazon’s VP of Buy with Prime, in the same announcement. “Allowing merchants to offer Prime shopping benefits on their own direct-to-consumer online stores is an exciting next step in our mission to help merchants of all sizes grow their business—whether on Amazon or beyond. With shoppers purchasing directly from merchants’ online stores, Buy with Prime will allow merchants to build customer relationships and brand loyalty while offering conversion-driving benefits like fast, free shipping.”

Move slow, break things

As with other very slow rollouts we’ve seen at Amazon, the expansion of Prime beyond Amazon’s walled garden has been in the works for years — more than three, in fact.

Back in March 2019 — when the company unveiled a partnership with WorldPay that enabled merchants outside of Amazon to start to accept Amazon Pay as a payment option alongside others like credit cards, PayPal, Apple Pay and Google Pay — its VP of Amazon Pay at the time, Patrick Gauthier, got very coy when I asked him about its ambitions to extend Prime in a similar way.

Instead, he pointed me to a small trial it was running with fashion retailer All Saints, which was providing Prime shipping benefits to customers if they were already Prime subscribers.

“It has been very successful in terms of customer conversion and lift, and to capture new customers,” he said. He also noted that it ran a different test during Prime Day in 2018, embedding Prime links with third-party merchants (but linking shoppers back to those merchants’ Amazon-based products) to understand the potential opportunity it might have here. “Yes, we have had interest from merchants if and when we decide to go further with Prime,” he added. (Gauthier has since left Amazon to run Convera, Western Union’s Business Solutions spin-out.)

Prime is Amazon’s Prime agent of change

Amazon is famously vague when it comes to user numbers and revenues for specific products. Its last official numbers are from April 2021, when founder (now) executive chairman CEO Jeff Bezos said it had 200 million members. (It now says it has “over 200 million.”)

Amazon Prime arguably has been the primary agent of change in the Amazon universe: first and foremost, it’s been the company’s chief (prime, even) way of building loyalty among customers, who have found the free and quick shipping options to be a huge lever to lowering the barriers to shopping online. The allure of quick and “free” shipping has been strong enough that Prime members turn first to Prime before considering (let along buying) other products when it comes to browsing and purchasing, a route made easier by Amazon’s search feature to search just for Prime-eligible products.

That’s been shown to be powerful enough that people are even willing to opt for a Prime-based product over one that is less expensive, but might take longer to receive, or have the shipping price spelled out more explicitly in the overall price — usually a combination of the two.

Amazon’s also used Prime to introduce completely different product categories, too, from groceries through to streamed media services. Overall Amazon says that Prime covers thousands of films and shows on Prime Video; 2 million songs, thousands of stations and playlists, and thousands of podcasts on Amazon Music; free games with Prime Gaming; over 3,000 books and magazines on Prime Reading; unlimited photo storage with Amazon Photos; grocery delivery and pickup from Amazon Fresh and Whole Foods Market; same-day and other fast deliver options for 15 million items in the U.S. alone; Amazon Pharmacy and prescription access; and more.

Considering how transformative Prime has been to Amazon itself, it’s fair to wonder if Amazon might try to exercise some of that strategy further afield, too. That is to say, if it starts with the bread and butter of its business now — the Marketplace, and the kinds of products third-party sellers already offer on Amazon itself — does it expand next to offering Prime for subscriptions to magazines and newspapers, or to other kinds of media, or to grocery shopping online?

One of the key issues with Amazon for so many has been that third-party brands haven’t been so keen to fit into the Amazon template when it comes to presenting its products. Amazon has tried to make efforts over the years to address this — for example this partnership with Adobe to help D2C brands using Amazon fulfillment to customize their storefronts — but generally even when a merchant has a storefront that looks “different” to the rest of Amazon on Amazon itself, going any deeper than the front page yields the same cookie-cutter river approach that Amazon has standardized across the whole of Amazon.com.

That attitude has driven a lot of business to the likes of Shopify, Commercetools and many others offering “headless” commerce solutions to merchants to build and run storefronts with as little or as much input, and integrating as many third-party solutions including those for logistics and fulfillment, as they are willing to make — a large army of third-party e-commerce technology providers amassing in the name of giving retailers a way to bypass Amazon.

Now, Amazon is playing nice with platforms like BigCommerce. Powering sites on their own terms does away with all of that, and could be a powerful option for a wide swathe of businesses beyond e-commerce, which have a very specific focus on content management.

Move slow, break things

There are many examples of how Amazon has not been the fastest draw when it comes to launching new things. It took Amazon years to add more countries to the Kindle beyond its home market of the U.S. (or really to add much of anything: do a search on TC or Google for the words “kindle” and “finally” to see what I mean). It’s worth wondering whether that drawn-out processes has helped or hindered the growth of e-books, or if it was both and they simply cancelled each other out.

The Kindle is worth looking at when considering how Amazon has done in building products that extend it to new frontiers, as Prime would do. The success of the its home-grown e-reader is undisputed: although Amazon is famously vague when it comes to talking about actual sales numbers, others estimate that its share of e-readers is around 68%.

On the other hand, e-books themselves are still a smaller market compared to the reading market overall, with Pew Research (admittedly using 2019 data) noting that only 7% of respondents said they only read e-books, compared to 37% saying they only read print books (28% read a combination). In other words, changing overall habits may or may not happen, and it will be a slow-burn issue one way or the other. But in the meantime, Amazon itself makes a killing in the market that it has created. That could well be a pattern that gets repeated with Buy with Prime.

Data is Amazon’s oil

Last but not least, there is a fascinating data play here for Amazon, which goes to the heart of how the e-commerce giant is fueling its growth.

Amazon is giving merchants control over aspects of the e-commerce process that would have been out of their hands if they sold through Amazon itself. They can control personalization for shoppers, the algorithms behind what different people are offered and how items get priced, and the wider user interface and experience. But if keep get full control of their data, Amazon now will see it, too.

It’s processing information about its Prime subscribers, key details about their shopping habits, behavior and interests across other kinds of sites that are not designed or run by Amazon — all information that it can in turn use to improve and shape what it sells on Amazon.com.

It goes beyond that, though. Amazon has become a major player in online advertising, an area that will also potentially benefit from richer datasets on browsing and shopping habits, which because this concerns Prime subscribers and processing Prime orders, will be first-party data for the company.

It’s also giving Amazon an interesting crack at an even bigger role in the online universe, that of identity management.

Companies like Facebook (Meta), Apple and Google have all made interesting plays at controlling the “log in” across apps and sites, creating social graphs and user graphs across different walled gardens (benefitting those controlling the log-in services), while also providing a way to manage users and profiles across specific apps and sites (benefitting those app and site publishers).

This gives that concept a new twist, and points to just how Amazon really could control it all. If Facebook focused on the social graph, and companies like Apple or Google have made a play to build the identity graph, Amazon has the potential to build the consumer graph, a bigger overall picture of how the internet moves based on purchasing activity.