Softbank to Flipkart: You up?
Also in this edition: Indigo in the red, A phygital chess tournament, Check the Facebook Bulletin.
Good morning! How was your weekend? Good? It was slightly weird for Bing. You know, the website where you search for Google? It blocked the tank man on Tiananmen Square images in its search results. There was some outrage on social media. And the images were back. Weird.
Anyway, on to the day’s stories.
Nigeria is ghosting Twitter, Koo to the rescue?
An oil spill near Sri Lanka is worse than previously imagined.
Indian consumers aren’t optimistic about the future.
Let’s Cry Over Spilt Oil
Right before World Environment Day, a Singapore-flagged ship sent 300 metric tons of oil, chemicals, and plastic spilling into the Indian ocean. MV X-Press Pearl, a container ship that had been burning at sea close to the Sri Lankan coast for almost two weeks, finally hit the ocean floor with toxins flooding out of its burnt hull.
Environmentalists have already sued the Sri Lankan government and the shipping company for failing to deal with the wreckage on time.
Worst spill yet: The non-profit organisation, Centre for Environment Justice, is calling this the “worst marine disaster” to date in Sri Lankan history. Panoramic tourist beaches on the country’s southwestern coast are now lined with millions of plastic pellets. As if the pandemic hadn’t done enough, a 50-mile coastal stretch has been cordoned off for residents. Authorities have also banned fishing in the area.
Costly, costly, costly: The spill could take months or years to be cleared out. It’s also going to be a costly clean-up affair that the Sri Lankan government says it can’t handle on its own.
The environmental damage is likely to wreak havoc for years to come and needs to be accounted for separately. Birds and fish might mistake the tiny plastic pellets for food. This may pass down the food chain and end up on our plates as microplastics. And the ocean currents are going to drag the damage deeper, where it may be harder to clean up. All in all, not a great day for planet Earth. Or Sri Lanka. Or us.
This Time It's Nigeria
It wasn’t a particularly great weekend for Jack Dorsey of Twitter*. Friday began with the Nigerian government banning Twitter for allegedly “undermining Nigeria’s corporate existence”, two days after it took down a tweet by the Nigerian president for “threatening violence”. And on Saturday, things spilt over in India.
Temporary: Initially the Nigerian ban was termed “indefinite”, but later the government clarified that it was “temporary”. It also threatened to ban ISPs that did not comply with the ban which came into effect on Saturday.
Koo’s gain: The Indian social networking platform wants to take advantage of Nigeria’s Twitter ban by expanding its service there. A global presence would perhaps bolster Koo’s valuation in a future fundraise.
But where’s my blue tick? The “blue tick” made its way to the headlines again, after Twitter temporarily removed the verified status from accounts of several leading Indian political figures, including Vice President Venkaiah Naidu. The company later clarified that the steps were taken as per its “inactive account policy”.
Comply or else: The government’s standoff with the platform continued, with the former giving Twitter one “final chance” to comply with the intermediary guidelines. Twitter has also been warned of “unintended consequences” for failing to do so.
SoftBank Got Heart Eyes For Flipkart
Over the weekend, news broke that Japanese conglomerate SoftBank is looking to invest $700 million in Flipkart. The Bengaluru-based company is raising a $1.5 billion pre-IPO round. Singapore’s sovereign wealth fund, GIC, and Canadian Pension fund, CPPIB, are also going to be a part of this round. Reportedly, this deal will close in the next three months and Flipkart will be valued at a staggering $35-40 billion after the money hits the bank. If this wasn’t enough, there is going to be another funding round before Flipkart lists next year.
There are three threads here that are important to understand.
This is the second time SoftBank has found its way onto Flipkart’s captable. The first time, it reluctantly left when Walmart acquired Flipkart in 2018. SoftBank had invested $2.5 billion and exited the company with ~$4 billion in its pocket within a year. SoftBank felt there was more to be made.
This round is an affirmation of that belief. Another way to look at this round is that it is an easy win for SoftBank in India. Its other investments haven’t played out yet. The likes of Oyo and Ola have been severely impacted by the pandemic and a slowing economy.
This is a win for Flipkart CEO Kalyan Krishnamurthy. When he took over, both the founders, Sachin and Binny Bansal, were being phased out of the company. It was also up to Krishnamurthy to ease the company into the acquisition of Jabong and help it navigate the ever complex policy waters.
Indian Consumers Just Won’t Spend
The Indian economy can’t catch a break. A Pew Research Center analysis has reported that the Indian middle class shrunk by 32 million people in 2020. The number of poor people (with incomes of $2 or less a day) has increased by 75 million. Naturally, Indian consumers’ confidence is hitting new lows.
Such pessimism: A consumer confidence survey conducted by the Reserve Bank of India reported that the current situation index fell to a record 48.5 in May from 53.1 in March. Not just that, the survey respondents gave grim responses about the year-ahead prospects.
What this tells us: Things were a little jittery even before the pandemic. According to a 2019 Business Standard report, consumer spending in 2017-18 had fallen for the first time in over four decades.
For an economy that was driven by consumption, job losses and lockdowns have made a bad situation worse.
Pony Up, Big Guy
This past weekend saw the UK host the 47th G7 summit, which ended up among the most significant ones in recent history. The foreign ministers and central bank governors of the G7 nations reached a formal agreement for global tax reforms.
Their main aim is to disrupt tax havens and have global digital giants pay their fair share — not quite covered by the current system based on rules that date back to the 1920s. It could result in hundreds of billions of dollars flowing into government coffers that have taken a beating due to the pandemic.
What changes? The agreement outlines two significant measures:
Countries should tax their home companies’ overseas profits at a minimum of 15% to deter shifting of profits to low-taxed countries.
Countries are entitled to tax companies "that have no physical presence but have substantial sales" in their territories. The recommended tax rate is 20% or more of profit exceeding a 10% profit margin.
US tech giants could be among the most impacted, as the new rules target the “largest global firms with profit margins of at least 10%.” But Facebook, for one, is taking it in its stride. It expressed support for the reforms despite expecting to pay more tax if they succeed. Perhaps in hopes that it can stop being in the middle of a tug-of-war between the US and other nations imposing taxes on Big Tech.
Catching Up With Covid
1,14,460: The number of new cases of Covid-19 reported in India for Saturday.
2,677: Deaths due to Covid-19 reported in India for Saturday.
Delhi reopens: The national capital and the rest of the NCR have eased Covid-19 restrictions from today. Metro services are back in Delhi with a 50% seating capacity.
SII lands another jab: Serum Institute of India has received the DCGI approval to manufacture Sputnik V, the Russian vaccine, in India.
Boost for frontline workers: India Inc. has begun vaccinating its essential workers such as delivery staff, driver-partners, and service professionals on a war-footing.
Catch ‘em young: China has authorised the emergency use of the Sinovac vaccine for children as young as three.
What Else Made The Signal?
Indigo flies low: The country’s largest domestic aviation company, InterGlobe Aviation, posted its fifth straight quarterly loss. The budget carrier reported a consolidated year-on-year net loss of INR 11.47 billion in the quarter ending March, compared to a profit of INR 8.71 billion for the same period last year.
Getting there: IPO-bound Paytm reported a revenue of INR 31.86 billion for FY21, down from INR 35.40 billion in the previous year. It also managed to narrow its losses from INR 29 billion to INR 17 billion.
Ready for a gambit? FIDE, the international chess federation, has approved the Global Chess League — a ‘phygital’ tournament that will be mentored by Viswanathan Anand.
Freedom at last? Of choice, that is. Following in Apple’s footsteps, Google will allow Android users to opt-out of being tracked by advertisers beginning late 2021.
Facebook goes newsy: There’s a new email newsletter on the block, from none other than Facebook. Bulletin, the social network’s subscription newsletter, is set to launch by June end. It will recruit writers to cover interesting stories for you that you can receive right into your inbox.
Let’s not drive: General Motors’-owned Californian company Cruise has received the go-ahead to test the state’s first driverless ride service. The best part? The company can’t charge passengers for rides during the pilot program. While eight other companies have permits for driverless testing in the state, Cruise is the only one allowed to give rides without a safety driver. It will have a remote safety operator instead.
Diving in: The International Olympics Committee is planning to sell digital versions of Olympic Pins in the form of NFTs.
Pandemic-proof: Despite no live concerts allowed, entertainment group Hybe saw its operating income rise 122% in the final quarter of last year, to $47 million. KPop sensation BTS contributed over 85% of the total.
Cat Patios: Your cuddly furball is a killing machine. Yes, we are talking about the internet’s favourite animal — cats. Did you know America’s ~58 million domestic cats kill ~2.4 billion birds each year? Cat and bird lovers are now building catios so their feline friends can relax as they plot the assasination of their prey. But never act on it.
Fairytale: Has the lockdown made you switch from Netflix n’ chilling to books n’ reading? Turns out, you’re not the only one! Bibliophiles, teachers, and parents can rejoice as the reading habit seems to be kicking back in. HarperCollins had a historic year-end quarter in 2020, and Harry Potter publisher Bloomsbury saw sales rise by 22%. Let’s just hope this sticks around long after the pandemic.
Japanese Banta: So, it turns out Japan has its own version of banta and has had it since 1884. It’s called Ramune, is popular for the codd-neck shape of its bottle, and is a staple of various Japanese Anime. Anime lovers already know about this, but those of you who don’t, here’s a fun video of a person opening the bottle.