Black swan incoming
Also in today's edition: Postman's $225m raise, Alibaba's NFT play, RK Damani in top 100 rich list.
Good morning! If you’ve been following us, you know we usually stand open-mouthed when it comes to Korean supergroup BTS. The seven boys have done it again. Their latest single sold more than the next 100 albums combined. This is all a little crazy.
On to the day’s stories:
Amazon beat Walmart for the first time.
Misinformation rating via community.
PhonePe’s got wealth on its mind.
Ola to all our new readers. Welcome. We hope you enjoy the ride.
The Market Signal
Stocks: Indices ended the day in the red as profit booking came early, Thursday being a holiday. Stocks fell from record highs in early trading on both exchanges. Banking, metals, and real estate stocks brought indices down on the BSE.
Facebook Can’t Sniff Out the Fishy Stuff
Facebook’s struggles with misinformation, conspiracy theories, and militias preferring it as organising grounds, aren’t exactly news. Think January 6, when the US Capitol was stormed. But dubious activity on the platform has intensified with the pandemic picking up pace again in the US, much to the dismay of the President, the surgeon general, and other White House officials.
It’s worse: A Tech Transparency Project report says that vaccine misinformation is rife on the platform, and militia groups are using it to promote “violent and anti-government views”. This, despite Facebook’s promise to crack down on them last year.
Cracking the whip: Twitter, meanwhile, is testing a feature allowing users to flag misinformation. Initially rolled out to users in the US, Australia, and South Korea, Twitter’s reporting feature will involve politics (election), health (Covid-19), or “something else.” Once reported, these tweets will be flagged to Twitter as “misleading”. The micro-blogging site had earlier partnered with news agencies to provide “credible information”.
China Readies Tough-As-Nails Privacy Law
China, which erected the great firewall to fend off foreign tech invasion, is preparing a legal fence to protect citizens from local Big Tech. It will likely pass the new Personal Information Protection Law in the next few days.
Tencent warned: Ahead of legislation, China warned 43 apps, including Tencent-owned WeChat, that they could be punished for stealing user data. Online frauds and data collection by big tech firms are rampant. The new law could be stiffer than the European General Data Protection Regulation, by far the gold standard in privacy laws. It will cover government agencies and require minimal personal data collection and only with prior consent.
Not the same: There could be a key difference, however. The law in Europe and the US are informed by two very different values: Europe protects its people from the invasions of the market and the media while the US law focuses on safeguarding individual freedom from intrusions of the state. In both cases, the laws try to keep the prying eyes of the state away. That may not be the case in China where surveillance is a strategic essential.
Betting On The Apocalypse
Palantir Technologies is prepping for the apocalypse, it would seem. Founded by tech billionaire Peter Thiel, the company is stockpiling gold because it expects more Black Swan events in the future.
Eternal gold: It spent over $50 million to buy gold this month and is also encouraging customers to pay in the bling metal or Bitcoins. Palantir COO, Shyam Sankar, said accepting non-traditional currencies “reflects more of a world view” and a preparation for more Black Swan events. It is stocking up gold in 100-ounce bars in the US northeast and has ensured it has quick access to it.
Predictive tech: The company which has had a testy relationship with Silicon Valley entrepreneurs on first principles, relocated to Denver last year. Palantir works closely with several European and the US governments, helping them with data analytics for a range of purposes, from counter-terrorism intelligence to Covid-19 management.
Palantir does global scale crystal-gazing with data for its clients. That makes its forecast scary. For centuries gold has remained the universal currency of the world with undiminishing value. The company betting on gold and Bitcoins as trusted stores of value indicate upheavals that would destabilise economies and destroy economic value. Palantir’s faith in the metal shows that it is not sure about the nature of calamity—another pandemic, war, or economic depression—that could cause disruption. Irrespective of what it is, Palantir wants to be ready.
PhonePe Gets Ready To Roar
PhonePe has raised $350 million in its first round of funding this year, taking its valuation to $5.7 billion. Walmart led the round with Tencent and Tiger Global jumping aboard as well.
Why? Earlier this month, the company’s board approved setting up an asset management company. This means PhonePe can start offering mutual fund services, which means it could become a sponsor or promoter to a mutual fund, investment trust. This increases its revenue potential manifold. Who doesn’t love money?
There’s history: This isn’t the first time, Phone has flirted with big names in the private equity industry. In 2019, Tencent and Tiger, along with Facebook, Google, KKR, and General Atlantic, considered investing in PhonePe. But the deal fell through because the valuation of $10 billion seemed too high.
Wealth Time: Amazon wants in on this too. It has invested $40 million in Bengaluru-based Smallcase.
Amazon Beats Walmart But It’s Still Not King
The covid-19 pandemic shepherded shoppers to online markets. The one that really scored was Amazon, surpassing Walmart to become the world’s largest retailer by sales outside China. The biggest is Alibaba.
In 2020 Walmart’s sales grew 97% as it invested heavily in beefing up its online business. But in the 12 months up to June, Amazon notched up $610 billion in sales while Walmart managed only $566 billion up to July. Walmart revolutionised retail with its big format stores and low prices, driven down by its pioneering global sourcing model. Then Amazon came along and disrupted Walmart’s big-box format by delivering customers the same value at their doorstep.
With China out of their reach, the companies are battling it out in the other frontier market, India. FMCG companies in India expect e-commerce sales to hit the double-digit mark within a year, as consumers continue to shop online. Walmart was quick to put money on online retail by purchasing Amazon’s competitor Flipkart. Amazon, meanwhile, is trying to acquire brick-and-mortar retailer Future.
What Else Made The Signal?
Bumper sales: SoftBank sold listed stocks worth ~$14 billion last quarter, nearly 3x of the same period last year.
Grow more: API platform Postman raised $225 million in a new funding round led by Insight Partners taking its valuation to about $5.6 billion.
Price hike: Cooking gas prices will go up by INR 25 per cylinder from Tuesday, putting more pressure on already stretched household finances.
No. 98: D-Mart founder RK Damani is now among the 100 richest people on earth with an estimated fortune of $19.2 billion. His wealth rose by $4.3 billion in 2021.
Fresh business: Alibaba's NFT Marketplace will now allow content creators to copyright work via blockchain IP service starting from next month at $15 apiece.
Asian race: Tencent is no longer Asia’s most valuable firm. Taiwan Semiconductor Manufacturing Company has beat the conglomerate to emerge on top.
Full stop: The Taliban have blocked all transit routes via Pakistan, halting annual trade with India worth about $1.5 billion.
Life-saving memer: Meme artist Tommy Marcus raised $550,000 from 11,000 people in an hour using a GoFundMe campaign to fly people stranded in Afghanistan out of the country. Go humanity!
Fake it to make it: Fast food chain KFC is playing some tricks in Poligono de Son Malferit, Spain, which is popularly said to be “where Ikea is”. It has opened a new outlet there and has put up a copycat logo of Ikea to woo customers. Cheeky.
Crescent Island: There’s a new island that Japan can add to its existing ~6,000 ones. An undersea volcanic eruption has created a new island in the shape of a crescent.
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