The Signal Wrap #2: Software Giants Want To Kill The Moonlight

A Vicious Circle Is Forming

As one of the most rocky financial quarters draws to a close, inflation continues to maul major economies, forcing shifts that could change the way the world functions.??

Fiery prices: In Argentina, prices are rising at a rate of 100%, forcing its central bank to raise interest rates to 75%. The British pound fell to a 37-year low. Home prices in Istanbul are up 200% as Turkish inflation soars to 80%.?

Fitch Ratings expects India to grow slower than expected in FY 2023. The US economy will also likely slow down as the Fed continues its war on prices. The impact was felt in global stocks, debt and commodity markets as panicked investors triggered sell-offs.

The Signal: Underpinning the inflation spiral is, of course, Russia’s war in Ukraine which has changed the dynamics of global energy supply. Investors who were withdrawing from fossil fuels may return to backing polluting energy sources such as coal. Governments are making moves that will see the world falling back a step or two in climate change mitigation and moving a step ahead in automation to save labour costs. Germany is taking over three Russian oil refineries. Taking advantage of a loophole in green energy laws, Europe is burning more wood pellets. Labour-short Japan is relying more on robots. So is China. That trend could spread as companies elsewhere will also lap up low-cost automation as an insurance against disruptions such as pandemic shutdowns.

Apple Needs A Pixar

Apple TV+ is going through a bit of a rough patch. The streaming arm wanted to bring its original video efforts into the limelight with Luck.?

The movie had a production budget of ~$140 million, an A-list voice cast, and an exclusive deal with Skydance Animation, headed by a Pixar veteran. But it did little to drum up interest.

Moar drama: Ted Lasso, which helped it nab Emmy's just last week, doesn't have a production date for its much-awaited Season 3. Apple is undecided about its $120 million drama, Emancipation, starring Will Smith. Why? Smith's brand has taken a hit, and Apple doesn’t want to associate with the actor for now.?

The Signal: Apple TV’s made all the right moves so far: it got attention at the Oscars and the Emmys this year. One would assume that iPhones, Macs, and Apple TV sales would translate to more subscribers. But success with streaming has been? elusive. It didn’t make as many strides as it wanted with its attempt to entertain a new audience—kids. Only 2.2 million Apple customers (two years and older) watched the movie. That's still a blip compared to Pixar’s Lightyear, (12 million views in the first week) which was an out-and-out flop in theatres and streaming. What we do know is that Apple TV+ now has 6.2% of the global streaming platform market share at a time when Netflix and Disney+ are looking to introduce ads. Apple needs to up the game if it intends to take on the giants. Stat.

Bull In The Cement Shop

Billionaire Gautam Adani wants to double his group’s cement manufacturing capacity to 140 million tonnes by 2030. Adani has pledged shares of Ambuja Cements and ACC valued at $13 billion to finance their acquisition from Swiss Holcim Group.?

Work in progress: Adani Group is also reported to be eyeing cement units in the southern and eastern parts of the country. It is now the largest cement manufacturer in the country after UltraTech. Adani is planning to invest another ?20,000 crore in its quest to be sector leader. On its part, the Aditya Birla Group company is spending~?13,000 crore to boost its capacity from the current 120 million tonnes to about 160 million tonnes by 2025.

The Signal: With Adani’s entry into the race, the dynamics of the cement industry will likely change and competition will intensify. So far, cement companies operated in a cosy cartel and divided up markets loosely according to regions. An investigation by the Competition Commission of India reportedly found that 50 industry executives in eastern and southern India were part of the “cartelisation” to fix prices and restrict supplies. While ACC and Ambuja were also named in the investigation report, Adani’s ambitions for a national footprint could effectively end cartelisation. It remains to be seen if they will continue to be part of the alleged cartel. It could eat into the market share of the existing players but also boost the operational efficiency of the sector as a whole. Unless, Adani also shakes hands with the cartel.???

Play Store Gets Picky

As the RBI and the government tighten rules to rein in Big Tech domination in India’s finance sector, Google has agreed to enforce more app transparency in its Play Store.?

Open it up: Loan and credit services apps will have to prominently link to their finance partners, be it a bank or non-banking finance company (NBFC). The apps are also required to display details of their services such as interest rate and payment schedules. Play Store will chuck out non-compliant apps.?

Meanwhile, online gaming company WinZo has sued Google for discrimination in a Play Store pilot for fantasy gaming and rummy apps. Google recently did a U-turn on its policy of not allowing online gaming apps that involved money and decided on a year-long pilot with some skill-based fantasy sports and rummy apps.?

The Signal: Google—for that matter most consumer-facing global tech firms—confront a peculiar problem in India. While the country has been at the forefront of rolling out cutting edge digital financial services even ahead of developed countries such as the US, frauds are common because of low financial and digital literacy. That means, their approach to regulation in India has to be more nuanced and sometimes very different from global policies. As for fantasy sports and rummy, it helps that the land’s apex court has categorically declared them as games of skill and not gambling. WinZo, however, says Google picking apps for its pilot itself puts those left out at a disadvantage.

Software Giants Want To Kill The Moonlight

It has happened. A side hustle will get you a pink slip at Wipro. The company fired 300 staff for clandestinely working for direct rivals. Fellow IT giant Infosys has also warned employees of termination if they took up work outside business hours, for rivals or not. Tata Consultancy Services has mandated its employees to work from office at least three days a week. There are outliers. Food tech company Swiggy gave the green signal to let employees take up a second job after securing an official nod.?

Also happening: Meta and Google are laying off staff without calling it mass layoffs. The tech giants are reorganising departments and asking employees to find new roles at the company within a time frame. Some are left with no roles and resentfully quit.?Meanwhile, the Adani and Ambani groups have entered into a no-poaching pact.?

The Signal: The shift to working from home reset how people viewed life, work and leisure. The pandemic and economic devastation crushed many organisations. Many were restructured and employees were laid off. Many lost jobs because their employers shut shop. In the following months, the great resignation happened, followed by quiet quitting and then quiet firing. The four-day work week got a thumbs up from 86% of the companies that tried it out. The ones who weren't fans were no surprise, "old-fashioned" companies. In countries such as India where the labour market favours employers, side hustles are are one way to beat rising costs of living. China, Japan, Germany and South Korea—countries with ageing populations—are seeing a robot boom. Work certainly is not the same anymore.

How do you fix India's electric dreams, anyway?

EV adoption is still nascent in India, but the numbers are picking up. The Indian government counts over 1.3 million electric vehicles on the road as of July 2022. The road transport and heavy industries ministries are pushing for greater EV adoption. Union road transport minister Nitin Gadkari expects more than 30 million EVs on the road in the next two years.

The government’s Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme has been instrumental in creating demand by subsidising manufacturing costs. It also explores several initiatives to expand charging networks and encourage battery swapping. Yet, it is silent on building a viable EV repair ecosystem.?

MG Motor India declined to answer The Intersection's questions for this story. The Intersection contacted nine EV manufacturers, including Mahindra Electric, Tata Motors, Bajaj Auto, TVS Group, Ather Energy, Sun Mobility and other startups for comment, but none have responded. This story will be updated if and when they do.?

At the moment, it is a chicken and egg situation. There are not enough vehicles on the road for independent service stations to sustain, but adoption will be slow because of the lack of a service network. Murarka says a majority of EV customers in India don’t have access to after-sales service or repair expertise. Right to repair acquires a certain urgency in the backdrop of the series of EV fires in the summer of 2022. Eight people were killed in Secunderabad on September 13 when a fire broke out in a building that housed an e-scooter showroom.?

While some companies offer breakdown assistance to customers, a majority of EV owners struggle to access repair services. It’s worse for two-wheeler owners who rely mostly on help from EV enthusiasts and jugaad fixes. PlugInIndia, an advocacy and support group for EVs in India, runs a popular YouTube channel and deals with community members’ issues on its Discord channel. Raphae Halim, a reviewer at PlugInIndia, explains that it shut down a popular tracker on EV issues and breakdowns on YouTube because it could not cope with demand.?

“We would try our best to help using our personal connections in companies to sort things out, but that’s not a viable option,” says Halim. “It’s a bigger systemic problem. Manufacturers and dealerships are not listening to customers.”