While the European economy neared the brink of collapse this year, the continent’s Internet startup and technology scene is in better shape than it has been for years.
In 2011, European startups got attention on the global stage, giants from the US increased their presence in cities like London and Dublin, and clusters of fresh activity in cities like Berlin have set the stage for a promising 2012. However, with privacy scandals and antitrust investigations, it hasn’t all been good news.
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Here we round up the biggest tech news from Europe in 2011.
Startup cities: London, Berlin and beyond
The poor state of the economy has led governments around Europe to look to technology startups to help stimulate the growth. The most high-profile example of this is London’s Tech City project. Announced in late 2010, the initiative designed to support and promote the natural startup hub that has developed in the UK capital’s East End has proved to be a big deal this year.
We’ve seen the UK Technology Strategy Board offer over 200 startups in the area the opportunity to apply for £100,000 in grants, the funding for which was later doubled. Meanwhile, Tech City got a New York ambassador to promote London’s digital businesses to the US east coast, plus a mentoring scheme. In 2011, London’s lively startup events scene has grown to feature the likes of jobs fair Silicon Milk Roundabout and CityMeetsTech, which aims to get investors from the city’s banking sector interested in startups.
A map of Tech City has grown to feature over 1000 companies, although as the businesses involved generally add themselves, and everyone from film-makers and fashion designers to digital media agencies and product designers are featured, it’s not necessarily a perfect barometer of strictly digital businesses.
Beyond London, though, Berlin was the city on European startup-watchers’ lips this year. Startups like SoundCloud, 6wunderkinder, Amen, Readmill and EyeEm all made news this year as the cafes of the German capital’s Mitte district became the place to hang out with your MacBook Pro in 2011. In August, we held an impromptu meet-up in Berlin and were surprised that at short notice, 20 startups came to show off their very high quality products. This led us to observe that Berlin was home to a new generation of gorgeous apps, emphasising great design – something European startups aren’t generally known for.
Copenhagen has quietly been building its own hub of startup activity, as we found in September, with companies such as Podio, Endomondo, Issuu and Senseye among those that have caught our attention this year. In Finland, we found that Nokia’s downsizing has led to skilled former employees building a nascent startup ecosystem.
Further east, Bucharest in Romania is worth watching – boosted as it is by the knowledge and enthusiasm of the How To Web team. Meanwhile, Riga in Latvia and Prague in the Czech Republic both received boosts from the international expansion of London’s TechHub.
It seemed like a new startup accelerator launched in Europe every week in 2011, offering intense mentorship to early-stage companies in order to boost their chances of success. While it wasn’t quite that busy, we did see growth from established names like Springboard (relocating to London and expanding into Russia) and Startup Bootcamp (expanding to Amsterdam with London and Berlin on the way).
The year of Spotify
Looking beyond the early-stage companies, some European startups really made their mark on the global stage, perhaps most notably Spotify, which finally launched in the US and partnered with Facebook. Both these factors helped the startup grow its user base substantially, hitting 2.5 million paid subscribers in November.
However, not everyone were happy that Spotify made a Facebook account compulsory for all new members and automatically shared all listened songs to users’ Facebook profiles. Spotify added a Private Listening mode as a response though. As the end of the year approached, it launched in further territories and announced a new third-party apps platform which allowed developers to build add-ons for its desktop app, although there was some disappointment surrounding the release.
Elsewhere, SoundCloud set itself up for a big future as the ‘YouTube of audio’ after funding from Union Square Ventures and Index Ventures in January. The startup has seen its platform expand with improved mobile apps and a user base which grew from 3 million in February to 7 million by October.
Big names, big acquisitions
Big American tech firms continued to invest in Europe this year. Google, opened new premises in Paris in December, following the announcement of a big new London base and a research institute in Berlin. Twitter opened up in London and Dublin, as the Irish capital continued to attract big US names (it’s more than just about low taxes, you know). The likes of Twitter and Zynga joined Google, Facebook and many others already situated there.
Undoubtedly the biggest European ‘startup acquisition’ story of the year was Microsoft’s $8.5 billion purchase of Skype in May. Originally a European startup, the VoIP provider had previously been bought by eBay, before being largely sold off to an investment consortium in 2009. As such, while original co-founders Niklas Zennström and Janus Friis profited from both sales, it was far from a conventional exit. Other notable big startup acquisitions in Europe this year included Lovefilm (bought by Amazon in January) and Tweetdeck (bought by Twitter in May).
Big tech firms vs Europe… and each other
Although the Skype acquisition got the green light from European officials, there was plenty of scrutiny of American companies’ actions in Europe this year. The European Commission’s investigation into Google’s allegedly anti-competitive behaviour against rival services’ placements in search results chugged on, while Apple and five major publishers are being investigated following allegations that they restricted competition over the pricing and marketing on e-books. As the year came to a close, Apple was fined $1.2m by Italian authorities over misleading product warranties.
However, proving that these disputes can sometimes be sorted out without large fines, IBM resolved a European Commission antitrust probe by making concessions to redress imbalance in the mainframe computer market.
Big firms weren’t just in disputes with regulators though, as Europe became the battleground for much of the ‘patent wars’ between players in the mobile phone market. Germany, in particular, was a popular location for such spats. Apple succeeded in getting Samsung’s Galaxy Tab 10.1 banned from sale there over design rights violations, leading to the launch of a modified Galaxy Tab 10.1N. The two companies have continued to fight in German courts as well as elsewhere in the world, with Samsung submitting its latest charges against Apple this month.
Meanwhile, Motorola won a dispute against Apple which led to the (remote) possibility of iPads and iPhones being banned from sale in the country.
Privacy was a common theme in tech news stories from Europe in 2011. Perhaps unsurprisingly, Google featured heavily, with Street View a common issue. In May, Google threatened to close the service down in Switzerland following pressure for increased anonymity of individuals depicted in its ground-level map exploration feature. Last year’s controversy over collection of WiFi access point data by Street View cars continued to cause problems, with significant fines for Google in both France and Belgium.
Meanwhile, in September, the search giant reached an agreement in Germany to allow users to opt out of having their complete IP addresses logged by Google Analytics.
Facebook also faced privacy troubles of its own. The Europe vs Facebook campaign called for improved transparency and consideration of users by the social network. This was amplified when Austrian citizen Max Schrems discovered how much data Facebook held about him after he requested it in a practice the company is legally obliged to comply with in Europe.
In December, Irish data protection officials published a report into how Facebook handled users’ information. Although it found the company to adhere to Irish law (Facebook’s HQ outside the US is in Dublin), it did recommend a number of improvements to its privacy policies, which it will carry out by July 2012.
It’s not always the tech names at the sharp end of privacy complaints though, sometimes the tables are turned. In April, over twenty companies, including Google Facebook and eBay, filed a complaint with France’s State Council, officially declaring their opposition to a ruling that would require them to keep data on users for over a year.
You can find all our 2011 Tech Rewind posts here.