The biggest crossover since Avengers

Also in today's edition: Etsy gets gutsy, Netflix's gotta pay in Korea, Cairn has a friend

Good morning! Last year was a weird one. It recorded one of the highest unemployment rates because of the pandemic induced layoffs but according to reports, the number of rich Indians grew at a rate of 5.9%. Another example of a K-shaped recovery.

Anyway, on to the day’s stories. 

  1. Zomato has eyes for Grofers.

  2. Zuckerberg’s got a $1 trillion boost.

  3. Moderna is coming to India. Finally.

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Zomato’s Playing Chess With Swiggy

Soon-to-list food tech unicorn, Zomato, has reportedly made a play for Grofers. Zomato, along with Tiger Global, will invest a shade over $120 million in Grofers at a $1 billion valuation. All of this with an eye towards an eventual acquisition. Zomato, according to a CapTable report, is also planning to increase the amount it planned to raise in the market. Earlier, the food-tech company wanted to raise $1 billion in primary capital, now it plans to raise $1.2 billion.

Two threads: There are two interconnected threads here. One, it makes Zomato more palatable to potential institutional investors who are looking at Swiggy, which optimises its delivery personnel to do food and grocery deliveries. Two, Grofers primarily targets a non-premium user base, with low order values. This is an important customer segment for Zomato, which has seen a surge in order values and customers willing to pay a delivery fee. This mix of customer base will keep its topline healthy despite lockdowns and a slowing economy.


Covid-19 Roundup: Things Are Looking Up For India

A peer-reviewed Indian Council of Medical Research (ICMR) study says the coronavirus third wave will not be as severe as the second. That would be a relief but authorities are busy preparing for it, training medical staff, and aggressively vaccinating citizens. India’s vaccination coverage now exceeds 328.5 million.

Good news: Pharmaceutical company Cipla has been granted approval by the Drugs Controller General of India to import the Moderna vaccine for restricted emergency use. Johnson & Johnson won’t be undertaking local trials for its single-shot vaccine in India, and is looking to speed up its availability. And, a UK study has found that a mix-and-match approach to covid vaccines can give good protection against the virus.

Vaccination scam? Madhya Pradesh had set a national record of administering 1.7 million vaccines in a single day. Apparently, among the vaccinated was 13-year-old Vendant Dangre. India is yet to vaccinate those under 18. There are a growing number of people claiming that they’ve received vaccination certificates but no jabs.


Facebook’s Antitrust Win Is Worth $1 Trillion

ICYMI, Mark Zuckerberg had a great (an understatement!) Monday. Not just because a federal judge threw out two antitrust cases brought by the FTC and 40+ states respectively, but because Facebook crossed an important milestone as a result of the ruling: $1 trillion in market capitalisation. That makes Facebook the fifth American company, and notably, the first founded in this century to breach that mark.

But what happened? The FTC and states had gone to court to unwind Facebook's acquisitions of Instagram and WhatsApp. The cases were dismissed (verdict, pdf) by the federal judge on Monday.

Whoa, but why? The cases were thrown out for two major reasons: the government failed to prove that Facebook held a monopoly over social networking, and the states waited too long to bring such a case. The judge said the FTC failed to establish that Facebook dominated the "personal social networking" market. This also comes in the shadow of the six antitrust bills introduced in the US Congress.

More good news: Closer home, the Kerala High Court dismissed a PIL seeking a ban on WhatsApp. And well, by the time you read this, Facebook's newsletter offering and Substack competitor, "Bulletin" will be up and running.

The Signal

The ruling is a shot in the arm for Zuckerberg, and the market agrees (FB shares rose 4.2%). The setback notwithstanding, US lawmakers have hinted that it only steels their resolve to reform antitrust laws.

Facebook may not be entirely off the hook with scrutiny expected to continue beyond US shores (EU, India, etc.) and in areas beyond antitrust, like disinformation and content moderation, and other platform dynamics. For now, a hump is crossed. Tomorrow, in Zuck-world, could well be a new day.


India Could Lose Emerging Market Status

MSCI has warned India, China, Brazil, Korea, and Turkey that it will scrap their emerging market (EM) status if they do not increase foreign investors’ ability to buy shares and bonds. MSCI, short for Morgan Stanley Capital International, is a firm that provides benchmark indices such as the MSCI Emerging Market Index. Widely tracked by global investors, managed assets worth about $14.5 trillion are benchmarked to MSCI indices.

Not free enough: MSCI says India, which currently has about 10% weightage in the Emerging Market and Asia Pacific Ex Japan indices, limits foreign portfolio investors in many stocks and does not offer any mechanism to trade among themselves. It also complained about the country not having an offshore currency market, curbs on the onshore currency market, and complex rules for foreign investors.

The sting: Losing the EM status means India could lose millions of dollars of foreign investments annually from global funds that automatically follow the MSCI indices. The firm has stripped Argentina of its EM status.


Gaming Shows The Way

In an era of walled-off services from big tech companies chasing monopolies and battling antitrust lawsuits, gaming firms offer an escape. Nintendo is a great example. Yesterday, it added the protagonist from rival studio Bandai Namco’s fighting game series “Tekken” as the final add-on character of its hit video game, “Super Smash Bros. Ultimate”.

The game now features characters from 39 different franchises, more than a dozen of which aren’t owned by Nintendo. The update also features crossovers with Capcom's "Devil May Cry", Microsoft-owned Bethesda's “Skyrim” and more.

The collaborations seem a bit selective, as it had recently emerged that Nintendo turned down a potential collaboration with Fortnite. That won’t be a huge problem for the Epic Games franchise which boasts crossovers from the likes of Marvel, DC, Travis Scott, English footballer Harry Kane and tons more.

Microsoft is also doing other crossovers, allowing the installation of android apps via the Amazon Appstore in its upcoming Windows 11 OS. That certainly seems like a good, caring way forward.


What Else Made The Signal?

Club membership: Fireside Ventures has led a $40 million investment in 10club, a Thrasio-like venture that acquires and grows upcoming e-commerce brands. This is one of the largest seed funding rounds for an Indian startup.

Making moves: Just a few months after buying Depop for over $1 billion to gain a foothold in the European market, Etsy has acquired Brazilian startup Elo7 for $217 million.

Shuttl down: The pandemic’s latest casualty, Gurugram-based bus aggregator app Shuttl has started winding up its operations. It’s exploring merger and acquisition opportunities and has laid off a significant part of its team.

No free streaming: A court in South Korea, one of the earliest countries to introduce high-speed Internet that started a streaming boom, has ruled that Netflix will have to pay network usage fees to mobile carriers. That could be a signal to carriers elsewhere.

App-y hour: Consumer spending on mobile apps in the first half of 2021 hit a record high of $64.9 billion as per data from Sensor Tower. But the rate of installation of new apps slowed down, only registering a 1.7% growth over the period.

A good deal: To push access to online education, Edtech company 2U Inc is buying web-based course provider edX for $800 million. A nonprofit, edX was founded in 2012 by Harvard University and MIT to democratise elite education.

Ganging up: Devas Multimedia, a company that won an international arbitration award against the Indian government, is joining Cairn Energy to try and seize Air India’s overseas assets.

Fun Signals

Spelling Bees: In this year’s US Spelling Bee contest, nine of 11 finalists are Indian-Americans. Perhaps this seems like an unusually high number. Indians, after all, make up for just 1% of the American population. But since 1996, there have been 26 Indian-American champions. Long story short, Indians are ace spellers.

Summer Blockbuster: In 2015, a Detroit server and exotic dancer, A'Ziah “Zola” King, wrote a 148-tweet thread about a wild trip she took to Florida upon an invitation from a woman she’d known for exactly one day. That viral fever dream of a story — about her sex trafficking experience — has been turned into a movie, “Zola”. Go figure.  

Let’s pop some corn: Astrophysicists at the University of Pennsylvania have spotted a comet larger than the Island of Hawaii, the biggest comet ever seen. By 2031, you should be able to see the icy, dusty object with a good telescope. Named after its discoverers, the Bernardinelli-Bernstein comet is currently inside Neptune’s orbit. You have 10 years to prepare for the big event.

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