MPL is king

Also in today’s edition: A world without passwords, Banking on bad assets, Big Tech weaponised acquisitions

Good morning! The US Soccer Federation declared that it would be paying its men’s and women’s teams the same pay and contracts. Earlier this year, the Irish Football Association, too, had decided that it too would offer its footballers the same pay. Better late than never. 


The Market Signal 

Stocks: Powered by Reliance Industries, ITC, and ICICI Bank stocks, the BSE Sensex and the NSE Nifty closed at new peaks. Vodafone Idea stock zoomed 25% after it got a government lifeline. Most bank stocks rallied as the government announced the setting up of a bank to take over bad loans.


Forgot Password? It’s Ok

Microsoft is ditching password logins for all its services. Instead, it is going to let users choose to access their accounts using its Microsoft Authenticator app, Windows Hello, a physical security key, and SMS or emailed codes.

Why? Human-generated passwords are fairly easy to hack into. Every second, 579 password attacks occur, adding up to 18 billion a year.

Passwordless logins are not new. Microsoft itself has done it before and many other companies like Google and Apple are also trying it out.

The future: Two-factor authentication makes for a secure internet experience. However, using SMS or emailed codes alone with vanilla passwords can still be problematic as they can be hacked into via SIM-swapping or mirroring. Authenticator apps, on the other hand, generate codes on the app itself and not the SIM card. Biometrics are even safer since it’s difficult to steal someone’s fingerprint. That is until someone finds a hack to copy biometric inputs.

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Bad Bank Is Coming

For many years, the government used taxpayers’ money to recapitalise banks plagued by poor risk management that created a mountain of bad debts. It is finally setting up a National Asset Reconstruction Company (NARCL) that will take over non-performing assets of banks worth about ₹2 lakh crore.

What’s the deal? Banks will sell their bad loans—₹90,000 crore initially— to NARCL for 15% cash up front and the rest in government-backed, tradable securities. The Cabinet has set aside ₹30,600 crore for this. The guarantee will stay for five years by when expectedly the asset will be is sold.

So, what? Rising bad loans have crimped banks’ lending capacity. Dodgy assets forced banks to keep 60% of their operating profits as provisions in the second quarter of FY22, leaving them with little money to improve their core business. Banks would have more leeway to bolster post-pandemic economic recovery by lending to credit-starved small businesses that contribute 30% of India’s GDP and account for nearly half of the country’s exports.  


What Puts MPL On The Unicorn Podium?

MPL joined the growing list of unicorns of 2021. Reports suggest 27 so far. The gaming company is now valued at $2.3 billion and is the second of its kind to enter this club. To be fair, The Signal has stopped counting now. Maybe some smart folks out there need to create a new barometer for measuring tech startups. Dragons, it seems, could be the new one. 

Roll the dice: But there’s something unusual about MPL, which helps it stand apart. It has 85 million users, mostly on Android. Ok? So what? Well, Google Play Store doesn’t host MPL’s app. It has to be sideloaded. The app can be, however, found on Apple’s and Samsung’s stores. 

Phoren dreams: Earlier this year, MPL went overseas with a move into the US, which almost guarantees it higher revenue. 

The Signal

The way MPL successfully grooms users is what has made it a unicorn. What happens when you become the best at a game? You stay, spend some more time, then it becomes boring. You move on. MPL doesn’t let users become a champion, and only lets them refine skills slowly so they don’t feel that they have “completed” the game. Like globally popular games, it gives users the impression that there is always another level to complete. This keeps them hooked and coming back for more. An active, hooked user spends more money and MPL makes more money.

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Just Another Crypto Day

To plug a hole in its product array and catch up with global rivals, the US’s largest cryptocurrency exchange, Coinbase, wants to start futures and options on its platform.

Derivatives could help boost trading volumes which on September 14 was around $5.5 billion. To compare, on the world’s biggest exchange, Binance, Bitcoin futures alone were over $17 billion in the 24-hour period. The highly-regulated Coinbase offers investors an alternative to more liberal, and hence risky, exchanges.

Popularity breeds fraud: A US court has sent Stefan He Qin, founder of cryptocurrency hedge funds Virgil Sigma and VQR Multistrategy Fund, to prison for embezzling $54 million in investor money.

India potential: Andreessen Horowitz is said to have opened talks to make its first India investment, in crypto investment platform CoinSwitch Kuber which was earlier valued at $500 million after a $25 million investment from Tiger Global.

Presidential mess-up: Protests have broken out in El Salvador which adopted Bitcoin as legal tender last week. The protestors, who set fire to a Bitcoin ATM, believe President Nayib Bukele’s move was aimed at consolidating power.


FTC Vows No More Secret Deals

Big Tech was using acquisitions as a weapon to kill competition, the Lina Khan-led US Federal Trade Commission (FTC) now believes. While the FTC was busy examining billion-dollar acquisitions, five big technology companies made 819 small deals that slipped under the radar between 2010 and 2019, a study by the commission revealed

Why? Under the Hart-Scott-Rodino Act, companies are only required to report transactions exceeding $92 million. Big technology companies rampantly exploited that loophole to nip competition in the bud by purchasing patents, hiring talented employees from other organizations, and acquiring small firms that could have grown to be threats.

Getting stricter: The FTC plans to identify and plug loopholes found by the HSR study, making it harder for companies to sidestep the regulatory lens.


What Else Made The Signal? 

Down the ladder: Tencent, the last Chinese company in the list of the world’s top 10 companies by market value, has dropped out of the coveted ranking. A harsh regulatory crackdown by China has eroded trillions of dollars in market valuation of its companies.

Buying spree: Byju’s has made another purchase, its ninth this year to be precise. This time, it has bought children’s coding site Tynker for $200 million to expand its US footprint.  

Mostly jabbed: China is ahead of the West when it comes to vaccination. It has given the Covid-19 jab to over 1 billion people, ~70% of its population, as of September 15.  

Tip jar: In the second-largest ever payout till date, the Securities and Exchange Commission in the US paid a whistleblower $110 million under its whistleblower program for a sanctionable tip.

Caller listing: Truecaller wants to list on Nasdaq Stockholm in its home country Sweden for $116 million. This could value the company at $3 billion.

Painted green: Australian graphic design platform Canva has raised $200 million, led by Franklin Templeton, Sequoia Capital Global Equities, and Greenoaks Capital among others. It is now the world’s fifth-most valuable private startup. 

Betting big: Brand-building company Mensa Brands has got $10 million from Tiger Global, now putting its valuation between $250-$260 million. 


FWIW

That’s not bacon: In an internet vandalism attempt, a British plant-based meat company called This replaced the images of bacon on Wikipedia’s page with pictures of its own products. Twice.

Trained missiles: North Korea is getting creative with its missile launches. It tested new ballistic missiles from a train.

Flipping over: CBS series The Activist, starring Usher, Julianne Hough, and Priyanka Chopra Jonas will switch over from being a competitive show to a documentary that will showcase the work activists put in. Filming is set to begin from scratch.

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