In this week’s edition of Five on Friday, Piano raises $88 million in new founding, and the United Kingdom’s Competition and Markets Authority investigates auto-renewal practices of anti-virus software companies including McAfee and Norton. Also this week, Pew Research Center reveals that a third of large U.S. newspapers had layoffs last year, more than in 2019, Epic Games and Apple face off in court, and Facebook partners with 14 Canadian news publishers on a new initiative to improve the news experience of Facebook users in Canada.
Piano Continues to Grow, Raising $88M in New Funding
Earlier this month, Piano announced it raised $88 million in new funding in a round led by Updata Partners along with investments from Rittenhouse Ventures and LinkedIn. The company’s most recent funding round was a $22 million Series B funding round which was also led by Updata Partners. Since that investment in January 2019, Piano’s revenue has grown by nearly 400%. In addition, the global analytics, personalization and subscription platform has expanded into the Asia-Pacific region, integrated its customer journey and data management capabilities, and acquired AT Internet, a France-based analytics platform. Piano will use the funding to fuel the company’s growth across functional areas, including data and analytics.
“The past two years have been an extraordinary period of growth for Piano as we’ve added new capabilities to our platform and grown into new markets,” said Trevor Kaufman, CEO of Piano, in the company’s May 18, 2021 announcement. “This funding, and the addition of LinkedIn as a strategic investor, will help us continue investing in the best technology and world-class talent, enabling our clients to create compelling, data-driven customer experiences.”
LinkedIn’s investment in Piano was their first. Scott Roberts, vice president and head of business development for LinkedIn, explained why they chose to invest in Piano.
“Members are increasingly turning to LinkedIn to stay informed on the news and views that shape their respective industries – critical to this is the work we do with trusted publishers and journalists,” said Roberts. “The opportunity to collaborate with Piano to help unlock more value for publisher content on LinkedIn makes it a natural strategic investment opportunity.”
Piano started in 2015. They currently serve about 1,000 customers on six continents, including CNBC, The Wall Street Journal, NBC Sports, The Economist, Gannett, Golf Digest, TechCrunch, and the South China Morning Post.
Competition and Markets Authority Investigates Anti-Virus Software Sector’s Auto-Renewal Practices
For the last several years, the United Kingdom’s Competition and Markets Authority (CMA) has been investigating whether automatic renewals for anti-virus software is the default option, if notifications are sent and if, when renewed, the price is the same as the original subscription. In June 2019, the CMA continued its research trying to identify whether consumers expressly agreed to the automatic renewals, if pricing remained the same at renewal, if customers “can easily prevent renewal,” and if those customers should be entitled to refunds.
At that time, the CMA reached out to several anti-virus companies who might potentially be breaching consumer law. In addition, the CMA reached out to 16 other anti-virus companies to get a sense of their business practices and terms and conditions that are compliant with consumer law.
In March 2021, the CMA reported that NortonLifeLock UK and NortonLifeLock Ireland LTD “have refused to comply” with the information notice. Because Norton’s non-compliance is a breach of the company’s legal obligations, the CMA is taking Norton to court to get access to the requested information. This is the first time the CMA has had to resort to such measures.
“It is completely unacceptable that a leading anti-virus software firm has refused to supply all the information we asked for, which is why we’re taking the firm to court,” said Andrea Coscelli, CMA Chief Executive. “Our unprecedented decision in this case reflects the serious impact of Norton’s refusal, which is delaying a CMA investigation intended to protect UK consumers.”
In May 2021, the CMA reported McAfee Ireland Ltd complied and addressed the CMA’s concerns by implementing the following actions:
- Giving customers on auto-renewal the right to terminate their contracts and receive pro-rated refunds, even after the refund window had expired. They will allow customers who asked for a refund in 2020, but who were denied, the opportunity to request and receive a refund.
- Emailing customers about the refund policy and provide clear information on the McAfee website about customers’ refund rights
- Simplifying and streamlining the process so customers can turn off the auto-renewal and get a refund. This new procedure will allow most customers to request refunds automatically.
- Notifying customers up front that their contracts will auto-renew, what the price will be at auto-renewal, and when they will be charged
- If the price is higher at auto-renewal, the company will not create “the impression that the initial price represents a savings by comparison.”
With these actions, the CMA’s investigation into McAfee’s business practices is concluded and “does not reflect either an admission by McAfee of liability or wrongdoing.” However, if legal action is brought against the company, that is outside CMA’s purview. They have not ruled that McAfee’s business practices did or did not infringe on the law.
A Third of Large U.S. Newspapers Had Layoffs in 2020 Compared to One-Fourth in 2019
Though everyone was eager for COVID and pandemic-related news last year, the newspaper industry suffered significant layoffs in 2020, more than in 2019 and close to the layoff levels of 2017, reports Pew Research Center. In fact, a third of large U.S. newspapers with average Sunday circulation of 50,000 or more had layoffs last year, with 11% implementing more than one round of layoffs. In 2019, only one-fourth of newspapers of that circulation size had layoffs. Some of the same newspapers who suffered layoffs in 2019, also had layoffs in 2020.
Medium- and large-market newspapers -– those with average Sunday circulation of 100,000 to 249,999 and 250,000 and above, respectively, had more layoffs last year than in 2019. Large-market newspapers –- those with average Sunday circulation of 250,000 or more –- were the most likely to have layoffs in 2020, with over half of them making staff cuts last year. In 2019, large-market newspapers had layoffs similar to newspapers over other circulation sizes. Digital-native news outlets had a slight increase in layoffs last year compared to 2019. Not all of the newspapers made their layoffs public. About 27% of newspapers with layoffs publicly announced the change in 2020; in 2019, 18% of newspapers share the layoff news.
One factor affected why large-market newspapers had layoffs, and smaller newspapers didn’t, was the federal aid made available through the CARES Act to small- and medium-sized newspapers. The aid package specifically helped small businesses cover payroll and related expenses, but larger organizations like Gannett and McClatchy were not eligible to apply.
Though Pew did not include this in their research, one reason for the layoffs was the decrease in advertising revenue. With nonessential businesses shut down early in the pandemic, many companies couldn’t afford to advertise in their local newspapers anymore. Hopefully, in 2021, newspapers will experience a rebound.
Epic Games and Apple Conclude Dramatic Three-Week Trial
Epic Games, the maker of the popular Fortnite video game, and Apple have been duking it out this month in court, and both sides have rested their cases after a three-week trial that CBS News called dramatic. The companies are anxiously awaiting the verdict from U.S. District Court Judge Yvonne Gonzalez Rogers, though the verdict is not expected for several months.
Epic Games brought the action against Apple last August for an alleged monopoly which forces developers to pay a 30% commission to Apple, sometimes called the Apple tax, if the developers want their games to be included in the App Store. In Epic Games’s 65-page complaint filed in the U.S. District Court of Northern California, Epic Games alleges that Apple imposes “anti-competitive restraints and monopolistic practices” which violate the Sherman Antitrust Act.
“Epic brings this suit to end Apple’s unfair and anti-competitive actions that Apple undertakes to unlawfully maintain its monopoly in two distinct, multibillion dollar markets: (i) the iOS App Distribution Market, and (ii) the iOS In-App Payment Process Market…Epic is not seeking monetary compensation from this Court for the injuries it has suffered. Nor is Epic seeking favorable treatment for itself, a single company. Instead, Epic is seeking injunctive relief to allow fair competition in these two key markets that directly affect hundreds of millions of consumers and tens of thousands, if not more, of third-party app developers,” the complaint says.
Last Friday, Judge Gonzalez Rogers asked Tim Cook why developers couldn’t offer less expensive alternatives to players.
“If we allowed people to link out like that, we would in essence give up our total return on our IP,” said Cook.
According to CBS News, Apple and Epic Games worked together to launch Fortnite on iOS in 2018. Apple spent about $1 million to market the game and earned more than $100 million through in-app purchases. It is estimated that the game’s gross proceeds could be as high as 10 times that amount with Apple’s revenue share being over $300 million.
Though Apple is favored to win the case because Epic Games violated the App Store’s terms and conditions, Epic Games’s action sheds light on the growing frustration developers feel toward Apple. To be included in the App Store, one of the top two app stores, developers are forced to comply with all of Apple’s conditions – including paying the 30% commission to the tech giant. If Epic Games wins, a significant precedent is being set which will likely bring additional actions against the company and which could cause Apple to rework their business practices to be more developer-friendly. This one is a nail biter.
Facebook Partners with 14 Canadian News Publishers to Test and Improve How Facebook Users Experience the News
As part of the Facebook Journalism Project, Facebook announced it is partnering with 14 Canadian news publishers on a new initiative called the News Innovation Test. Facebook said the purpose of the initiative is to “promote a healthy news ecosystem, elevate authoritative journalism, and deliver a valuable experience” for Facebook users who care about the news.
The publishers include blogTO, Canada’s National Observer, The Coast, La coopérative nationale de l’information indépendente, Daily Hive, Le Devoir, Discourse Media, FP Newspapers, Narcity, The Narwhal, SaltWire Network, The Sprawl, The Tyee, and Village Media.
Facebook will pay publishers to let them link to additional news stories they aren’t publishing on Facebook to allow the social media platform to experience with different ways to enhance the news experience. This could include adding links to local and national news hubs or information hub.
“We know the important role journalism plays in keeping people informed and safe, which is why we want to do our part to contribute to the long-term sustainability of journalism and help increase underrepresented voices in newsrooms. In addition to the News Innovation Test, we’re investing $8 million over the next three years to help Canadian publishers build sustainable business models, through programs like the Facebook-Canadian Press News Fellowship and the BIPOC Media Growth Program,” said Mark Dinsdale, head of media partnerships for Facebook Canada, and Kevin Chan, global director and head of public policy for Facebook Canada in a May 25, 2021 announcement.
Several publishers shared their thoughts on being included in the News Innovation Test:
“This pilot project lays the foundation for a renewed relationship of trust between traditional media and Facebook. Le Devoir obtains what it has always asked for, following fair negotiations. The agreement respects our subscription-based business model and is beneficial to Le Devoir, which seeks to increase its readership and reach more Quebecers. In fact, redirecting all traffic to our platform will help cultivate relationships with users,” said Brian Myles, General Manager and Editor of Le Devoir.
“We’re excited to be one of the first Canadian publishers participating in this test.” Facebook is a valued partner and terrific distribution channel for our content. We look forward to continuing to work with Facebook to connect with new audiences and grow our business,” said Tim Shore, founder of blogTO.