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iPhone Emulation Company Sued by Apple Says It’s Making iPhones Safer

A startup that makes replicas of the iPhone that help hackers find vulnerabilities is accusing Apple of suing it in an attempt to shut it down. Corellium also fired back at Apple and claimed the company owes it $300,000. On Monday, Corellium, the startup that was sued by Apple for alleged copyright infringement in August,…

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iPhone Emulation Company Sued by Apple Says It’s Making iPhones Safer

A startup that makes replicas of the iPhone that help hackers find vulnerabilities is accusing Apple of suing it in an attempt to shut it down. Corellium also fired back at Apple and claimed the company owes it $300,000.

On Monday, Corellium, the startup that was sued by Apple for alleged copyright infringement in August, filed its response to the lawsuit. Apple alleged that Corellium’s product is illegal, and helps researchers sell hacking tools based on software bugs found in iOS to government agencies that then use them to hack targets. The cybersecurity world was shocked by Apple’s lawsuit, which was seen as an attempt to use copyright as an excuse to control the thriving, and largely legal, market for software vulnerabilities. The lawsuit was filed just a few days after Apple announced it would give researchers special “pre-hacked” devices to allow them to find and report more bugs to the company.

“Through its invitation-only research device program and this lawsuit, Apple is trying to control who is permitted to identify vulnerabilities, if and how Apple will address identified vulnerabilities, and if Apple will disclose identified vulnerabilities to the public at all,” Corellium argues in its response, echoing arguments made by the security research community.

In its response, Corellium essentially argues that using Apple’s code in Corellium is fair use and its product makes the world a better place by helping security researchers inspect the iPhone’s operating system, find flaws in it, and help Apple fix them. With Corellium, researchers can more easily find bugs by creating virtual instances of iOS and test them more quickly, as opposed to having to use actual physical devices. Corellium attempts to illustrate this by including “before” and “after” images in its response that demonstrate what it was like to try to hack the iPhone before it released its software.

1572365932779-Screenshot-2019-10-29-at-093809

A screenshot of a portion of Corellium’s response to Apple.

As Motherboard reported earlier this year, Corellium employees acquired special iPhones from the grey market that are sometimes called “dev-fused” or “prototype” iPhones. These are iPhones loaded with special software that Apple employees and factory workers use for testing, and have fewer security restrictions in place, allowing researchers better access to parts of the phone’s operating system and code. (At the time, Wade denied ever acquiring these devices, but six sources told us that the company did have them.)

Last week, Apple made eBay remove a listing that offered a prototype iPhone for sale for $10,000.

Corellium’s key argument lies on the assumption that Corellium’s customers are looking for bugs with the intention of alerting Apple of their existence.

Do you work or have at Apple or Corellium? We’d love to hear what you think about this lawsuit. You can contact this reporter securely on Signal at +1 917 257 1382, OTR chat at lorenzofb@jabber.ccc.de, or email lorenzo@motherboard.tv

For now, however, that is only an assumption.

The only customer Corellium names in its response is Azimuth Security, which was acquired by defense contractor L3 last year. As Motherboard reported last year, Azimuth is one of the best companies in the world at finding bugs in iOS, and developing exploits that take advantage of those bugs. Azimuth does not report those bugs to Apple. Instead, it sells hacking tools based on those bugs to law enforcement and intelligence agencies in the United States, UK, Canada, and other countries. Many security researchers who specialize in finding flaws in iOS don’t report bugs to Apple because they prefer to keep the bugs for themselves, or sell them to third parties.

When Motherboard asked today whether they ever reported a bug in iOS found using Corellium, Mark Dowd, the founder of Azimuth, said: “no.”

Daniel Cuthbert, the head of cybersecurity research at Santander bank, said that his team used Corellium to test the bank’s apps on different iPhone devices and iOS versions, and it was very useful for that.

“The real power and strength of Corellium is that it helps people write better apps by distributing and testing them in an automated fashion that doesn’t depend on physical devices,” Cuthbert said in a phone call. “Apple is hurting the business world more than they think.”

Another key part of Corellium’s defense is that Apple has known about the company for years and has always been friendly to one of its founders, Chris Wade. Corellium alleges that Apple invited Wade to join its bug bounty program, which rewards researchers who report security vulnerabilities to Apple, in 2017, and even offered him a job years before he founded Corellium. Since then, according to Corellium, Wade reported as many as seven bugs, worth $300,000, for which he has not been paid.

When asked for comment, an Apple spokesperson directed Motherboard to the company’s original filing.

Wade was not immediately available to respond to questions.

Researchers had been reluctant to report bugs to Apple after the bug bounty was launched in 2016, and some complained it was hard to get paid. But some researchers have been paid in the last couple of years, as Motherboard reported last year.

Corellium hinted that it knows the real reason why Apple allegedly did not pay Wade for the bugs he found, but the reason is redacted in the response.

The startup asked for permission to file its response under seal to avoid “the possibility of expanding this litigation,” but said in a motion that it believes the response should be published in full.

In an article published on Tuesday, Forbes revealed that Apple was in talks to acquire Wade’s previous startup, which offered a similar product as Corellium. Multiple sources told Motherboard that Apple was in talks to acquire Corellium as well, but those talks did not go anywhere.

This story was updated to include Daniel Cuthbert’s comments.

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These ten enterprise M&A deals totaled over $40B in 2019

It would be hard to top the 2018 enterprise M&A total of a whopping $87 billion, and predictably this year didn’t come close. In fact, the top 10 enterprise M&A deals in 2019 were less than half last year’s, totaling $40.6 billion. This year’s biggest purchase was Salesforce buying Tableau for $15.7 billion, which would…

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These ten enterprise M&A deals totaled over $40B in 2019

It would be hard to top the 2018 enterprise M&A total of a whopping $87 billion, and predictably this year didn’t come close. In fact, the top 10 enterprise M&A deals in 2019 were less than half last year’s, totaling $40.6 billion.

This year’s biggest purchase was Salesforce buying Tableau for $15.7 billion, which would have been good for third place last year behind IBM’s mega deal plucking Red Hat for $34 billion and Broadcom grabbing CA Technologies for $18.8 billion.

Contributing to this year’s quieter activity was the fact that several typically acquisitive companies — Adobe, Oracle and IBM — stayed mostly on the sidelines after big investments last year. It’s not unusual for companies to take a go-slow approach after a big expenditure year. Adobe and Oracle bought just two companies each with neither revealing the prices. IBM didn’t buy any.

Microsoft didn’t show up on this year’s list either, but still managed to pick up eight new companies. It was just that none was large enough to make the list (or even for them to publicly reveal the prices). When a publicly traded company doesn’t reveal the price, it usually means that it didn’t reach the threshold of being material to the company’s results.

As always, just because you buy it doesn’t mean it’s always going to integrate smoothly or well, and we won’t know about the success or failure of these transactions for some years to come. For now, we can only look at the deals themselves.

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Jumia, DHL, and Alibaba will face off in African ecommerce 2.0

The business of selling consumer goods and services online is a relatively young endeavor across Africa, but ecommerce is set to boom. Over the last eight years, the sector has seen its first phase of big VC fundings, startup duels and attrition. To date, scaling e-commerce in Africa has straddled the line of challenge and…

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Jumia, DHL, and Alibaba will face off in African ecommerce 2.0

The business of selling consumer goods and services online is a relatively young endeavor across Africa, but ecommerce is set to boom.

Over the last eight years, the sector has seen its first phase of big VC fundings, startup duels and attrition.

To date, scaling e-commerce in Africa has straddled the line of challenge and opportunity, perhaps more than any other market in the world. Across major African economies, many of the requisites for online retail — internet access, digital payment adoption, and 3PL delivery options — have been severely lacking.

Still, startups jumped into this market for the chance to digitize a share of Africa’s fast growing consumer spending, expected to top $2 billion by 2025.

African e-commerce 2.0 will include some old and new players, play out across more countries, place more priority on internet services, and see the entry of China.

But before highlighting several things to look out for in the future of digital-retail on the continent, a look back is beneficial.

Jumia vs. Konga

The early years for development of African online shopping largely played out in Nigeria (and to some extent South Africa). Anyone who visited Nigeria from 2012 to 2016 likely saw evidence of one of the continent’s early e-commerce showdowns. Nigeria had its own Coke vs. Pepsi-like duel — a race between ventures Konga and Jumia to out-advertise and out-discount each other in a quest to scale online shopping in Africa’s largest economy and most populous nation.

Traveling in Lagos traffic, large billboards for each startup faced off across the skyline, as their delivery motorcycles buzzed between stopped cars.

Covering each company early on, it appeared a battle of VC attrition. The challenge: who could continue to raise enough capital to absorb the losses of simultaneously capturing and creating an e-commerce market in notoriously difficult conditions.

In addition to the aforementioned challenges, Nigeria also had (and continues to have) shoddy electricity.

Both Konga — founded by Nigerian Sim Shagaya — and Jumia — originally founded by two Nigerians and two Frenchman — were forced to burn capital building fulfillment operations most e-commerce startups source to third parties.

That included their own delivery and payment services (KongaPay and JumiaPay). In addition to sales of goods from mobile-phones to diapers, both startups also began experimenting with verticals for internet based services, such as food-delivery and classifieds.

While Jumia and Konga were competing in Nigeria, there was another VC driven race for e-commerce playing out in South Africa — the continent’s second largest and most advanced economy.

E-tailers Takealot and Kalahari had been jockeying for market share since 2011 after raising capital in the hundreds of millions of dollars from investors Naspers and U.S. fund Tiger Global Management.

So how did things turn out in West and Southern Africa? In 2014, the lead investor of a flailing Kalahari — Naspers — facilitated a merger with Takealot (that was more of an acquisition). They nixed the Kalahari brand in 2016 and bought out Takelot’s largest investor, Tiger Global, in 2018. Takealot is now South Africa’s leading e-commerce site by market share, but only operates in one country.

In Nigeria, by 2016 Jumia had outpaced its rival Konga in Alexa ratings (6 vs 14), while out-raising Konga (with backing of Goldman Sachs) to become Africa’s first VC backed, startup unicorn. By early 2018, Konga was purchased in a distressed acquisition and faded away as a competitor to Jumia.

Jumia went on to expand online goods and services verticals into 14 Africa countries (though it recently exited a few) and in April 2019 raised over $200 million in an NYSE IPO — the first on a major exchange for a VC-backed startup operating in Africa.

Jumia’s had bumpy road since going public — losing significant share-value after a short-sell attack earlier in 2019 — but the continent’s leading e-commerce company still has heap of capital and generates $100 million in revenues (even with losses).

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Airbnb’s New Year’s Eve guest volume shows its falling growth rate

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between. It’s finally 2020, the year that should bring us a direct listing from home-sharing giant Airbnb, a technology company valued at tens of billions of dollars. The company’s flotation will be a key event in…

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Airbnb’s New Year’s Eve guest volume shows its falling growth rate

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

It’s finally 2020, the year that should bring us a direct listing from home-sharing giant Airbnb, a technology company valued at tens of billions of dollars. The company’s flotation will be a key event in this coming year’s technology exit market. Expect the NYSE and Nasdaq to compete for the listing, bankers to queue to take part, and endless media coverage.

Given that that’s ahead, we’re going to take periodic looks at Airbnb as we tick closer to its eventual public market debut. And that means that this morning we’re looking back through time to see how fast the company has grown by using a quirky data point.

Airbnb releases a regular tally of its expected “guest stays” for New Year’s Eve each year, including 2019. We can therefore look back in time, tracking how quickly (or not) Airbnb’s New Year Eve guest tally has risen. This exercise will provide a loose, but fun proxy for the company’s growth as a whole.

The numbers

Before we look into the figures themselves, keep in mind that we are looking at a guest figure which is at best a proxy for revenue. We don’t know the revenue mix of the guest stays, for example, meaning that Airbnb could have seen a 10% drop in per-guest revenue this New Year’s Eve — even with more guest stays — and we’d have no idea.

So, the cliche about grains of salt and taking, please.

But as more guests tends to mean more rentals which points towards more revenue, the New Year’s Eve figures are useful as we work to understand how quickly Airbnb is growing now compared to how fast it grew in the past. The faster the company is expanding today, the more it’s worth. And given recent news that the company has ditched profitability in favor of boosting its sales and marketing spend (leading to sharp, regular deficits in its quarterly results), how fast Airbnb can grow through higher spend is a key question for the highly-backed, San Francisco-based private company.

Here’s the tally of guest stays in Airbnb’s during New Years Eve (data via CNBC, Jon Erlichman, Airbnb), and their resulting year-over-year growth rates:

  • 2009: 1,400
  • 2010: 6,000 (+329%)
  • 2011: 3,1000 (+417%)
  • 2012: 108,000 (248%)
  • 2013: 250,000 (+131%)
  • 2014: 540,000 (+116%)
  • 2015: 1,100,000 (+104%)
  • 2016: 2,000,000 (+82%)
  • 2017: 3,000,000 (+50%)
  • 2018: 3,700,000 (+23%)
  • 2019: 4,500,000 (+22%)

In chart form, that looks like this:

Let’s talk about a few things that stand out. First is that the company’s growth rate managed to stay over 100% for as long as it did. In case you’re a SaaS fan, what Airbnb pulled off in its early years (again, using this fun proxy for revenue growth) was far better than a triple-triple-double-double-double.

Next, the company’s growth rate in percentage terms has slowed dramatically, including in 2019. At the same time the firm managed to re-accelerate its gross guest growth in 2019. In numerical terms, Airbnb added 1,000,000 New Year’s Eve guest stays in 2017, 700,000 in 2018, and 800,000 in 2019. So 2019’s gross adds was not a record, but it was a better result than its year-ago tally.

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