Did Jeff Bezos lie to Congress?

Also in today’s edition: A delay for a delay, A tax haven gone, Early Christmas for techies

Good morning! How much would a wipe cost? Ok, a premium, micro-fiber 6x6 square? $1.50 on Amazon. $19 if it has a bitten-Apple logo in a corner and is “compatible with” even iPhone 6 and Macs dating back to 2012! Wonder if the world’s most outrageously priced gadget hanky is Pixel compatible too. Not that it matters. There is already a 3-4 week waiting period for the polishing cloth.

Btw, our podcast has been going strong for over a month now. Tune in on your daily jog, drive to the office, or even as you WFH-ers have breakfast in bed. We promise it’ll be music to your ears.


The Market Signal

Stocks: Both Indian benchmarks closed in the red to break their seven-day winning streak. They did not, however, suffer as much as the broader market with the Nifty Midcap 100 and Nifty Smallcap 100 indices slumping 2.6% and 1.8% respectively. Among the sectoral indices, only IT and Financial Service managed to register gains.


Rollercoaster: IRCTC became the ninth Indian PSU to cross a market capitalisation of ₹1 lakh crore on the back of early gains as its stock hit a peak price of ₹6,393/share. However, a massive slide saw it drop to Rs 4,995/share and finally close trading at ₹5,363/share.


Vaccine Diplomacy Gets Prickly

The WHO has said that it will not “cut corners” in evaluating Bharat Biotech’s Covaxin for Emergency Use Listing (EUL). Annoyed, India has delayed committing vaccines to the COVAX vaccine sharing alliance. 

The WHO’s technical advisory group is meeting on October 26 to evaluate granting EUL to the indigenously developed Covaxin. India has administered more than a billion Covid-19 shots, 113 million of which are Covaxin jabs. 

Why so long: The EUL application has been on WHO’s table since July but it has been seeking more information. Bharat Biotech has been providing data on a rolling basis to the organisation and the last data tranche was expected to be submitted yesterday. 

Redux: This isn’t the first time India has engaged in tit-for-tat vaccine diplomacy. When the UK instituted mandatory quarantine for those who had got Covishield jabs, India reciprocated with its own curbs on travellers from the UK.

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Rich Indians Lose A Haven

After 136 countries, including the UAE, agreed to set a 15% minimum corporate tax rate, many rich Indians who had set up private holding entities in Dubai and Abu Dhabi to take advantage of the low tax regimes are now worried.

Safe haven gone: Some also created structures for key persons in these companies to relocate there. They fear that after the global tax deal, UAE may bring private trusts and holding companies too under the tax net.  

White-listed again:  Meanwhile, Mauritius, which had been ‘grey-listed’ by the Financial Action Task Force for a while, will soon be out of it. It is a country preferred by many foreign investors as a base for their investment vehicles for India. The rerating is likely because Mauritius has made several regulatory and operational changes to combat money laundering and terror funding. 


The Amazonian Brand Protection Myth

After Facebook and Apple, it’s now Amazon’s turn in the firing line. The online marketplace is under scrutiny for its copycat strategies and favouring its own branded products on its portal. A congressional committee of five members is looking into whether company executives, including Jeff Bezos, lied under oath about Amazon’s search policies. 

What’s the fuss about? A Reuters investigation claims that the e-commerce giant uses sellers’ data in India, one of its fastest-growing markets, to produce knock-off products and pushes them high up in its search results. 

Another report from The Markup alleges that the strategy is region- and product-agnostic. From kitchenware to furniture, the reports say, Amazon systematically surveys bestsellers and then manufactures its own versions of them, placing them right on top of the search even if they don’t have the reviews or ratings to back it up. The only way for others to compete? Go in for sponsored listings. It’s a win-win for Amazon. The company has vehemently denied these assertions. 

Special treatment: Amazon is also reportedly giving some sellers protection from counterfeit products. No guesses about which league is getting the preferential treatment. Small sellers are still having to contend with duplicate products that are damaging not just to revenue but also their brand.  

The Signal

As an open marketplace theoretically, Amazon is supposed to be fair to all sellers. But in practice, these revelations confirm long-held fears about platform power (and abuse thereof): that they’d inevitably prioritise their own products and services in recommendations. Needless to say, this has created a discord among sellers, who’ve looked at alternatives such as Shopify. Some others moved out over allegations of counterfeit policing. While Amazon insists that third party sellers on its site are doing fine, this is unlikely to change the growing consensus in Washington that Amazon (and others) exerts considerable influence over its marketplace, and that some action ought to be taken. This is far from over.

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Tech Hiring Is Buzzing Again

After a long lull, investment banks are hiring in big numbers in India and South East Asia. It’s a prelude to more mergers and acquisitions in the consumer internet market that has seen an explosion in startup activity. The red-hot sector has also reversed the Covid-led placement slowdown.

Big Bucks: Recruitment from colleges show a healthy trend. Delhi’s Shri Ram College of Commerce, which set B.Com admission cutoff at 100%, have spotted first-time recruiters such as Meesho on campus. Average pay packages are also up 25-35%. I-bankers, meanwhile, are searching for finance pros who understand new-age businesses, can think like entrepreneurs and execute deals fast. 

Jobs are back? Campus hiring is a clear indicator of the country’s white collar jobs  scenario looking up. Here, investment banks, IT companies and startups constitute the bulk of the hiring. Entry level jobs had vanished as long lockdowns and economic disruptions due to Covid-19 shuttered thousands of small businesses and put a pause on hiring by the big ones. The tide finally appears to be turning. 


AI No Match For Humans

Facebook’s AI almost inevitably features in company hearings, transparency reports, and press statements. But how effective is it? A Wall Street Journal investigation reveals it isn’t quite the magic bullet Mark Zuckerberg often portrays it to be. In fact, it’s quite the opposite. A dud, as per the company’s engineers.

Uh oh: Facebook’s AI, which is built and trained to spot objectionable content such as pornography, violent videos and racist rants, often misses them. The result is that such content doesn’t get removed from the platform.

No sir: The company says its “proactive detection rate” (what its AI spots before users) had reached nearly 98% as of earlier this year. Yet, one senior engineer and research scientist estimated its AI removed just 0.6% of all content that violated its policies against violence and incitement.

Big Tech’s abiding faith in AI’s accuracy, which relies on image and voice matching, and historical training data, often discounts the value of human acuity. Companies looking to carry out tasks at scale incorrectly assume AI can replace, not just assist, humans. 

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What Else Made The Signal?

Leg up: Fintech firm CRED has raised $251 million in a new funding round, led by Tiger Global and Falcon Edge Capital, putting its total valuation now at $4.01 billion.

Thumbs down: It’s not often that India’s most valuable company by market cap gets downgraded. Broking firm Nomura has downgraded Reliance Industries ahead of earnings citing ‘rich’ valuations.

Target acquired: US Congress is forging legal shackles to rein in Big Tech as lawmakers narrow down targets and mull new curbs on online content. 

Exit before IPO: Ola’s chief financial and operating officers have left the company even as it prepares to file for a potential $1 billion IPO.

Parents’ liability: After laying down conduct rules for kids, China is preparing to wield the stick on parents if their children behave badly.

New definition: India’s new National Employment Policy that is in the works is set to redefine gig and platform work as “employment”. Companies currently treat them as partners, not employees.

Price shock: There is perhaps no better weathervane for prices than Hindustan Unilever. Worryingly, the FMCG major said it hasn’t seen “this kind of inflation in years”.


FWIW

Three Men and a Name: Famed Spanish crime author who wrote the popular trilogy La novia gitana is, in reality, three men - Jorge Diaz, Agustin Martinez and Antonio Mercero. They were writing under a pseudonym for years and the plot was revealed only when the author won the one million euros 2021 Premio Planeta literary prize and the trio came forward to claim it.

Wizard outlawed: Hogwarts isn’t the only place for wizards. Until recently, New Zealand’s Christchurch had an official wizard, Ian Brackenbury Channell, performing rain dances and attracting tourists, while getting paid $10,000 every year by the government. Until, his foul-mouthed remarks about women sparked some outrage and he was fired.

Darjeeling Express: London’s hottest supper club is one of our own – Asma Khan’s Darjeeling Express that sells street-style food such as phuchkas and kebabs. But the most popular dish? Biryani, of course. The “dum-phukt” dish is such a hit that celebrities such as Ant-Man Paul Rudd are queueing up for a taste.

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