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The Google-Facebook cartel
Also in today's edition: Flipkart faces a fine, KM Birla steps down, and green signals for online games
Good morning! We won’t blame you if you’ve missed this one. But the world’s best footballer, Leo Messi, is out of a club right now. Barcelona, the club where he has played for most of his career, is in a bind. It has debt close to 1 billion euros and can’t sign him up. This may change. CVC Partners have acquired a 15% stake in La Liga, the Spanish body, and will give cash injections to clubs that are reeling due to the pandemic.
On to the day’s stories:
India is getting poorer.
So are Chinese billionaires.
And the world if it goes to carbon net zero.
Google Colluded With Facebook?
This is like one of those crossover films where two rival factions team up to defeat one common villain. T’chala and M’Baku to fight Thanos’ army. The same but slightly different. Google has been accused of teaming up with Facebook by two Massachusetts-based companies.
Wait, what? Have you realised there are some ads that pop up on some websites and when you come back they are replaced by another? Those are programmatic ads.
In 2014, a system was set up where multiple ad exchanges could bid for spots. If more people bid, the publishers would make more money. The lawsuit claims that Facebook colluded with Google to pull back its bids in exchange for “preferential treatment in Google’s ad business.” This restricted publishers from making money.
When did it happen? This all started, according to the lawsuit, in 2018. If the companies who have filed do win, Google will be the only party to this.
Whose Gig Is It Anyway?
Delivery executives from Swiggy and Zomato have been taking to Twitter over the past week to protest their alleged exploitation. Their complaints include no compensation for soaring petrol prices, no consideration of long distances, and caps on daily earnings. The tweets have garnered thousands of likes and retweets.
Doing our bit: The companies claimed that the average earnings of delivery partners have increased over the past year. Zomato had earlier said it was taking several measures to counter the impact of rising fuel prices.
The complaints have trailed Zomato’s successful IPO and Swiggy’s $1.25 billion funding. Perhaps delivery personnel feel they aren’t receiving their fair share.
Best listen: The jury is out on whether partners of on-demand companies such as Uber, Zomato, Swiggy, etc. should be considered employees. Indian legislation is in favour of granting them social security benefits. If this issue gets inflamed, it could end up burning a deep hole into the companies’ bottom lines.
A Slide Back Into Poverty
India is getting poorer at a rate never seen before. Most governments work hard to lift people out of poverty but between 2012 and 2019, more people fell below the poverty line. How many more? A staggering 70 million more. All of this before the pandemic, two economists found. They anticipate Covid-19 to push more people below the line.
Jobs lost: About 3.2 million salaried jobs were lost in July despite the pandemic easing. Studies have also shown that women are the worst affected. About 60% of jobs lost in small industries were held by women. The loss for 47% of women between March and December of 2020 was permanent.
Green shoots? Economic data released in the past few days, however, show a glimmer of revival. Exports have rebounded, unemployment has eased, and manufacturing is showing an uptick. After a dip in June below INR 1 trillion, GST collections too went up to a 3-month high of INR 1.16 trillion. All these are on low bases and the tax collection includes that of micro-enterprises that remit their dues only once a quarter.
It is clear that multiple shocks — demonetisation in 2016, hurried introduction of GST in 2017, and the pandemic beginning 2020 — have knocked the economy off the rails. Even the fledgling recovery will be difficult to sustain if a large number of people do not find work. Good rains and a bountiful harvest had helped last year. The monsoon has been erratic this year, causing floods in some places and droughts in others. That will depress rural incomes. Inflation has been inching up globally. A combination of income losses and price rise does not bode well.
Carbon Net-Zero Plans = World Hunger
The race to achieve net-zero emissions could actually fuel global hunger. Non-profit Oxfam says measures for carbon neutrality might hike food prices by 80% in the next three decades.
Where’s the land? Two ways countries and businesses offset emissions are via reforestation and afforestation. Oxfam research shows trees have to be planted on at least 1.6 billion hectares of land for the planet to achieve net-zero targets by 2050. That equals five times the land area of India. It could shrink land available for farming and disrupt food security for a growing population.
Think sustainable: Other steps, such as switching to agroforestry, which is a method of combining crop cultivation with growing trees, and using renewable energy could be more viable solutions.
Hammering Chinese Billionaires
Tencent founder Pony Ma has lost nearly $14 billion over the past nine months, dragging his personal net worth down to $45.8 billion. He is third on China’s rich list, behind Zhong Shanshan and Jack Ma, whose fortune is worth $47.8 billion.
Rich don't get richer: The plunge in Pony Ma’s net worth comes amid a tense business climate where companies ranging from ride-hailing and ed-tech to food delivery and music streaming have come under sustained regulatory fire. Billionaire owners of these firms took a combined hit of $13.6 billion in a single day.
No one spared: A total of over $1 trillion has been wiped out of Chinese stocks. Foreign investors are reading up on President Xi Jinping’s past speeches looking for clues to the next target.
What Else Made The Signal?
On the flip: News of the Indian government weighing a $1.35 billion fine on Flipkart for allegedly violating foreign investment laws saw Walmart’s stock price take a dip.
Gasping for funds: The World Health Organization urgently needs $11.5 billion in funding to battle the coronavirus Delta variant.
Double your money: OfBusiness has managed to double its valuation in four days. Earlier this week, the company raised capital from Softbank at a valuation of $1.5 billion. Four days later, it is in talks to get Tiger Global on its captable at a $3 billion valuation.
More cash: Fintech startup BharatPe’s flirtation with Tiger Global has borne fruit. It has managed to raise anywhere between $350 million and $370 million. It enters the unicorn club and has a new CEO.
Game on: A day after the Madras High Court struck down a state government ban on online games such as Rummy and Poker, the Supreme Court has upheld the Dream11 fantasy sports format as a ‘game of skill’.
Disconnected: Kumar Mangalam Birla has stepped down as non-executive chairman of telecom operator Vodafone-Idea.
Take action: Google has fired dozens of employees for data breaching using the company's tool, between 2018 to 2020, according to a leaked document obtained by Motherboard.
She’s a Barbie girl: Professor Sarah Gilbert, who led the development of the Oxford/AstraZeneca Covid-19 vaccine, has been honoured with a Barbie doll made after her.
Do you want a toy? China’s largest toy retailer, Kidsland International, is eyeing a new market – toys for adults. The company wants to cash in on Asian adults’ demand for pop toys or collectible cartoon figurines.
Crypto discount: A man in Utah is offering a 10% discount on the sale of his home if the buyer pays him in dogecoin.