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Big Tech sinks Biden’s bill
Also in today’s edition: Inflation pushes up credit card usage; Amazon Food is expanding; Apple is far out in China; Instagram cuts back on Shopping
Good morning! Meet Kim Kardashian, the investor. According to the Wall Street Journal, she's partnering with a former executive at Carlyle Group, to launch SKKY Partners, a private-equity firm that will put their money into consumer and media businesses. Of course, momager Kris Jenner will be a part of SKKY as a partner. But we saw that coming.
The Market Signal*
Stocks: Christopher Wood, global head of equity strategy at Jefferies, is raising stakes on India by adding 2% to allocations. Bitcoin plunged below the $19,000 mark on Wednesday, mirroring global stocks. The countdown to the Ethereum merge has officially begun with the Bellatrix upgrade going live.
Early Asia: The SGX Nifty surged 0.62% higher than its previous close at 7.30 am India time. Nikkei 225 was also up (1.98%). The Hang Seng Index (-0.46%) lingered in the red.
Big Money Slays Tough Law
Alphabet, Amazon, Apple, and Meta are heaving a sigh of relief. The whopping $95 million they spent lobbying to stall a key antitrust reform seems to be working.
Why? With midterm elections looming in November, the window to pass the American Innovation And Choice Online Act, is closing. This was a key agenda of the Biden administration and the narrowly-held Democratic Senate since 2021.
Conceding: The primary sponsor of the bill, Amy Klobuchar has (almost) conceded defeat. Why? A $120 million advertising onslaught by these companies and related groups, Bloomberg reported.
Timing: Alphabet CEO Sundar Pichai couldn't have timed his comment on Google’s competition headwinds better. Meta has been incessantly talking up TikTok’s threat. That said, the stalling of the bill comes at a time when the Federal Trade Commission’s scrutiny of several deals has intensified.
More Consumers Are Swiping Plastic
Gilt-edged plastic was always the big spender. But measured by average spends, the ubiquitous cards used by middle-class consumers are catching up.
Tell me more: Average spending on non-premium credit cards rose by more than two-thirds, from ₹4,368 in January-June 2021 to ₹7,290 during the first six months of 2022. That’s as much as a premium credit card.
Why? Spending was affected by pandemic-induced lockdowns last year. Higher prices this year means consumers are paying more for the same shopping basket. The fastest growing payments on credit cards are fast food, clothes, fuel, utilities and groceries.
What it means? Home budgets are getting squeezed and consumers are likely taking on more debt to keep up with expenses. Are credit cards maxxing out? The upcoming festive season will perhaps tell.
Amazon Food Heads To The Land Of The Peshwas
So says a report in The Economic Times. After nearly two years of piloting Amazon Food in Bengaluru, the tech conglomerate may launch the food delivery service in Pune. It’s a big move in context of the Zomato-Swiggy duopoly and its teething problems in ‘Luru.
Recap: A 2021 CNBCTV18 story authored by the same journalist revealed that Bengaluru restaurateurs were dissatisfied with Amazon Food despite its lower commissions. Reasons included abrupt cancellations, delayed pickups, and scant orders compared to Swiggy and Zomato. Amazon also had stringent onboarding criteria (120 back then) over and above government-granted FSSAI licences. The ET story claims Amazon has now watered down this checklist.
Food delivery confounds Amazon– a Galactus that otherwise managed to devour publishing, e-commerce, AI, cloud computing, streaming, and perhaps even healthcare. This sector seemed a natural progression for a company with logistics muscle. But batching food and e-commerce orders together may not be the gamechanger it’s made out to be. The failures of Amazon Local, Daily Dish, and Amazon Restaurants in the US and UK underline this.
As we wrote in July, Amazon changed tack to acquire stakes in international food delivery companies and bundle those services with Prime. It’s a mystery why the company isn’t following the same playbook in India; if the demise of Foodpanda and Uber Eats’ exit from India taught us anything, it’s that profitable differentiation is the only buoy in a business notorious for high burn and low margins.
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Huawei Pips Apple
Chinese smartphone maker Huawei staged a minor coup launching its satcom-enabled Mate 50 phone a day ahead of Apple’s “Far Out” product launch event. Mate users can send text messages via satellite.
Incremental show: Apple launched the iPhone 14 with upgrades to camera, processor and screen size. It has satcom capability in emergencies. It also revealed a rugged, water-proof watch variant, Ultra. Apple has kept its prices steady.
Supply chain: While some of these phones are being manufactured in India, they will largely ship from its shopfloor of 15 years, China. Zhengzhou remains Apple’s mainstay for both technological and process expertise. During the pandemic, it moved up the chain in design and manufacturing, snatching several functions from travel-wary Cupertino executives. A decade ago, Chinese suppliers accounted for 3.6% of an iPhone’s value. That has risen to 25%.
Meta Deletes Shopping From Insta’s Cart
Instagram is phasing out its shopping features by March 2023. Instead, it will focus on features that bring home $$$s through advertising, reports The Information.
Check out: Last year. Meta looked to shopping as a potential revenue-spinner after its ad targeting was wrecked by Apple’s App Tracking Transparency feature. It has since identified several existential challenges: the metaverse (long-term) and short-video aka Reels (short-term).
Out of pocket: It doesn't plan to shut shopping just yet. Meta will publicly pilot a “less personalised” version of the page called Tab Lite. A pivot to paid features on its platforms to address shrinking ad revenue is next.
The move seems to be forced by current economic headwinds and perhaps is also a tacit admission that Meta wasn't that big into commerce after all.
Cloud funding: Microsoft was revealed as one of the investors in Travis Kalanick’s post-Uber venture – CloudKitchens.
World War III, anyone?: Elon Musk reportedly wanted his bankers to go slow on his Twitter purchase in May over the cascading effects of a Vladimir Putin speech. In related news, a Delaware court has rejected Musk's request to delay the case.
Searched: Think-tank, Center for Policy Research, new media funder, Independent and Public-spirited Media Foundation, and NGO, Oxfam India, were searched by Income Tax authorities.
Axe: Netflix is trying to save every penny it can. This means hiring junior staff, cutting down on perks, and putting rising cloud-computing costs on a leash.
Green light? Capital markets regulator Sebi is mulling over letting private equity funds invest in local asset management companies.
No meat ads, please: Haarlem in The Netherlands will go down in history as the first city in the world to ban meat ads in public from 2024. This is in an effort to discourage consumption, and in turn, reduce carbon emissions. Well, why shoot the messenger?
Offended: Netflix’s received a knuckle-rap. Of sorts. Gulf Cooperation Council which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE has warned Netflix to remove content that are offensive and immoral in Islam or risk being banned. It indirectly referred to the shows and movies that include LGBTQ elements.
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