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Google’s existential crisis
Also in today’s edition: Netflix enters its Jane Fonda phase; Online economy outpacing offline economy; India’s thorny affair; A step ahead for consumer protection
Good morning! It’s our last daily newsletter of 2022 (watch out for our year-end specials next week), and what better way to sign off by telling you about the network effects of Spotify Wrapped? Axios reports that the audio streamer’s annual recap of user activity—arguably the most successful use case of data collection—is inspiring similar roundups. Everybody from The Los Angeles Times and The Washington Post to Nintendo and Instacart is reminding people about what they consumed throughout the year. Meanwhile, Tinder and Pornhub have resorted to aggregate insights: ‘situationships’ and ‘reality porn’ were the dominant trends on both platforms, respectively.
🎧 Justin Bieber has reached an agreement with Hipgnosis Songs Capital to sell his music rights for around $200 million! But why are big names in the music industry selling music rights? The Signal Daily is available on Spotify, Apple Podcasts, Amazon Music, and Google Podcasts, or wherever you listen to your podcasts.
The Market Signal*
Stocks: Two Jims are bullish on Indian equities. UK Chatham House chairman Jim O’Neill, the former Goldman Sachs economist who coined BRIC as a global investment strategy, told ET Now that India looks the most promising among BRIC in the next five years.
Jim McCafferty of Nomura told The Economic Times that India is “by far the most attractive proposition” for investors.
Measured by shareholder value creation, four Adani group companies topped the charts for 2022. They appreciated between 134% and 226% during the year, an Economic Times analysis showed.
Early Asia: The SGX Nifty (-1.22%), Nikkei 225 (-1.14%) and Hang Seng (-0.16%) were all awash in red at 7:30 am India time.
Netflix And No Chill
The company that competes with sleep now wants you to get up and work out… while still tuning in. Netflix is diversifying into fitness content with classes from Nike Training Club. It’ll drop the content in two batches, December 30 and 2023.
This marks Netflix’s latest foray into non-core verticals after gaming, and will pit the streamer against at-home fitness platforms such as Peloton, Apple Fitness+, and yes, CultPass LIVE.
Aside: Netflix’s battle against password sharing is more complicated than the company thought it’d be. Mostly because it wants to restrict account sharing to those who live together, but still needs to accommodate people who’re travelling or watch content on their phones, as many in India do.
Speaking of India, Alia Bhatt-starrer Darlings had the highest opening ever of any Netflix film in the country. Netflix also wants to double down on licensed south Indian titles.
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Rise Of The Motherboard
India’s digital economy (DE) is increasingly more productive than the overall economy, according to the RBI.
Exhibit 1: Every $1 demand for computer products in 2019 added $2 to the country’s GDP. A similar demand for telecom services added $1.77 to national output, a central bank study (pdf) said.
Exhibit 2: The core DE’s (largely ICT) share in India’s GDP rose from 5.4% in 2014 to 8.5% in 2019 and it was growing 2.4 times faster than the rate at which the whole economy was expanding.
The paper largely considers the far side of the pandemic (and hence is a bit dated). The DE, especially ecommerce and finance, likely expanded much faster in the last three years. DE has made deep inroads in creative areas as well. However, some segments such as ride-hailing are yet to recover.
Google Is On A Search Rescue Mission
One of the world’s largest companies by market cap is in ‘code red’ mode. The New York Times reports that Alphabet-owned Google is scampering to shield itself against the threat posed by OpenAI’s AI chatbot ChatGPT. We’d written about ChatGPT here.
What’s the fuss?: ChatGPT is the Swiss army knife of chatbots because it can do everything from answering queries to creating screenplays and text-based games. It’s not connected to the internet yet, but if/when it’s able to crawl search engines, it can pose a threat to Google’s biggest cash cow.
Why?: Imagine a world where search can be conducted in a chat window, devoid of advertising links. That’s the world Google is afraid of, because over 80% of its revenue comes from digital ads. Worse, the likes of Amazon are already eating into Google’s online ads pie.
Google CEO Sundar Pichai is redeploying resources to focus on AI-everything, including products that can compete with OpenAI’s DALL-E, which generates images from text.
Google has first mover advantage with AI products such as LaMDA, a chatbot so advanced people thought it was sentient. But unlike ChatGPT, LaMDA isn’t open to all because as a public company facing antitrust challenges, Google can’t afford to let biased and incorrect information out into the wild.
That’s a risk smaller companies can take, for now. So Google is left with a Sophie’s Choice: either find a way to release and monetise AI products to overhaul search, or play safe and wither.
🎧 ChatGPT is posing a serious threat to Google. What is it? Tune in to find out! The Signal Daily is available on Spotify, Apple Podcasts, Amazon Music, and Google Podcasts, or wherever you listen to your podcasts.
Growing cactus plants was not on our bingo card for 2023 but finance minister Nirmala Seetharaman might have it on hers.
The Economic Times reports that the union budget might announce incentives to populate degraded land with cactus plantations. The prickly, arid-land natives are proven to have multiple uses such as producing biofuel, fodder and organic fertiliser.
A Mexican company, Nopalimex, has been producing cacti biogas for many years and is now supplying vehicle fuel at $0.65 a litre.
The extent of degraded land in India has increased from 96.32 million hectares in 2013 to 97.84 million hectares in 2019. Although we like the idea of gainfully utilising degraded land, we just hope the cactus story doesn’t get stunted like the biofuel promise of jatropha.
Guaranteeing The Warranty
The government is planning a new insolvency framework for property developers. Construction projects frequently get stuck when developers face a cash crunch. Home buyers who purchase houses with borrowed money are the worst affected. Often they end up paying both rent and EMIs while waiting endlessly for their homes.
Real estate firms comprised 436 of 1,999 bankruptcy cases pending at the end of June 2022. Faster insolvencies would help homebuyers occupy their homes even if the builder goes bankrupt.
Tinker site: A consumer rights framework is in the pipeline to ensure quality and durability of products through service and repair. The government will launch a website where consumer durables, auto, and even farm equipment companies will have to inform about after-sales service, maintenance and spare parts.
Both these initiatives will go a long way in easing major consumer pain points in India.
Firing squad: Elon Musk’s Tesla, according to The Electrek, is implementing a fresh round of hiring freezes and mass layoffs, likely in the first quarter of 2023.
Free plea: Caroline Ellison, the former CEO of Alameda Research, will avoid jail time as part of a plea agreement with the US Department of Justice. Ellison, however, faces fresh charges by the US’ Securities and Exchange Commission.
Add to cart: Reliance Retail has snapped up Metro AG’s India business for ₹2,850 crore ($344 million), while Torrent Group has topped an e-auction to acquire Reliance Capital for ₹8,640 crore ($1.04 billion).
Foursome: Four Indian films including RRR, Chello Show, All That Breathes, and The Elephant Whisperers, have been shortlisted for The Oscars’ nomination stage across categories.
Up the value chain: Edtech unicorn PhysicsWallah is entering the upskilling segment after acquiring 100% of iNeuron.ai from S Chand and Company.
Ramping up: Under-fire TikTok is stepping up its efforts to reassure US government authorities, including expanding Oracle’s role, and proxy boards in its US Data Security division.
THE DAILY DIGIT
The number of reports logged by users on DownDetector on March 8, 2022, when Spotify had an outage for over two hours. Spotify also edged WhatsApp by about 200,000 reports, when the latter went down on October 25, for the largest outage of 2022. (DownDetector)
Trip the queue: It was a simple hack, but very lucrative. Daniel Abayev and Peter Leyman teamed up with Russian hackers to game the taxi dispatch system at the JFK International Airport in New York. Airport cabbies did not mind paying the swindlers $10—well worth skipping the many hours at the holding station—to jump the queue to ferry passengers from the JFK International Airport to Manhattan, a flat $70 ride. The two con men ran the scheme successfully for about a year before being found out and arrested.
Obit: Ali Ahmed Aslam, the British chef of Pakistani origin widely credited with inventing the chicken tikka masala, has died. The 77-year-old’s claim that he made the curry—tandoori chicken chunks in a yoghurt and cream gravy—after a customer found his dish too dry, is believed to be the most credible among many, including a Bangladeshi and a Punjabi one. Anyhoo, Aslam’s Shish Mahal restaurant in Glasgow is regarded as the most authentic representation of the quintessential modern British curry and even staked a claim for EU Protected Designation of Origin status.
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