What's the controversy around Israel's judicial reforms? And, why Twitter's rebrand has some challenges to overcome

Market Watch

• Indian benchmark indices ended the day flat, with the Sensex falling 29 points at 66,355 and Nifty increasing 8 points at 19,680.
• Sectorally, Nifty PSU Bank (-1.46%) and FMCG (-0.86%) shed the most, while Metal (2.94%) and Media (1.51%) gained the most.

Three things to know:

• Despite ITC retaining 40% stake in the demerger of its hotels businesses, brokerages are?optimistic that the move will lead to value unlocking.
• FIIs have?sold IT stocks worth over Rs 9,000 crore?in the June quarter, dumping stake in Infosys and Tech Mahindra.
• India may be impacted by Russia’s potential move to?slash the tax discount on its crude oil exports?from $25 per barrel to $20.

Israel passes law to limit the Supreme Court’s power

Amidst widespread protests, the Israeli Parliament has passed a law that?removes the power of the Supreme Court?to overrule government actions it deems “unreasonable.”

• The newly approved law is the first in a series of proposed reforms aimed at?curbing the power of the courts.

The big picture:?Israel’s judiciary holds significant power and possesses broad authority to?evaluate laws based on subjective “reasonableness,”?making it capable of easily invalidating legislation.

• Additionally, judicial appointments are controlled by the legal establishment, not elected officials, contributing to its self-perpetuating nature.
• Those in favor of the bill say it will?rein in the judiciary, arguing the reasonableness standard is too vague and allows the courts to reject the decisions of election officials based on political grounds.
• Prime Minister Benjamin Netanyahu said the law is necessary for the government to “carry out policy in line with the decision of the majority of the citizens of the country.”

The response: The bill was?passed by a 64-0 vote, which opposition parties boycotted.

• Critics argue that the reforms, which triggered some of the largest protests in Israeli history, destroy the checks and balances underpinning Israeli democracy.
• The opposition plans to petition the High Court on Tuesday against this legislation.

The intrigue:?Israeli startups are taking measures to?move portions of their operations and funds outside the country?in response.

• A survey by Start-Up Nation Central shows that 68% of startups are taking legal and financial steps such as moving their headquarters, relocating employees, conducting layoffs, and withdrawing cash reserves from the country.?
• While only 8% of startups have begun the process of moving their headquarters outside of Israel, 29%?intend to do so in the near future.
• Additionally, 19% of the startups have laid off employees, with some firing up to 30% of their workforce.?
• About 78% of startup executives confirmed that the proposed changes to the judicial system are negatively affecting their operations, with 84% of venture capitalists agreeing that it has a detrimental impact on their portfolio companies.

Why this matters:?Israel is a major tech hub, with the sector contributing significantly to Israel's GDP and exports.

• The uncertainty surrounding the judicial overhaul is leading investors to increasingly support foreign companies, harming the ability of Israeli startups to raise funds. Fundraising by Israeli tech firms in the first half of the year dropped by 73% compared to the first half of 2022.
• Top officials of Israel’s Finance Ministry have also warned that?the reforms could harm the economy?due to negative sentiment from foreign investors, while?credit rating agency Moody’s?noted that tech companies may leave the country as a result.
• Moody’s has also?downgraded Israel’s sovereign credit profile?from ‘positive’ to ‘stable’ due to “a deterioration of Israel’s governance,” which could harm economic growth and fiscal income.

Of note:?Tel Aviv’s?share indices fell 2.5%?and the shekel lost 1% against the dollar following the news.

Hi, I’m Gaurav Jeyaraman, the editor of this newsletter. We’d like to hear some feedback on our newsletter: what works and what doesn’t work??WhatsApp me directly?and tell me what you think.

Rebranding Twitter as X wipes billions in brand value; Copyright issues emerge

Elon Musk’s decision to rebrand Twitter by changing its name to ‘X’ and removing its iconic bird logo has?drawn widespread criticism from analysts and brand agencies.

The details:?The Twitter brand has immense global recognition and has become part of modern culture, and Musk’s revamp has led to?a loss of between $4 billion and $20 billion?in brand value.?

• One branding strategist pointed out that the letter ‘X’ brings to mind?negative associations, such as ex-boyfriend/girlfriend; another?described the logo?as “very harsh” and “having an ominous ‘Big Brother’ tech overlord vibe.”
• The name's?similarity to adult video streaming site Xvideos?also caused the latter to join the top trends on Twitter.

Furthermore,?several other companies, including Twitter’s direct rivals,?own ‘X’-related trademarks?that could complicate the image revamp.

• While Microsoft owns an ‘X’ trademark for communications about its Xbox video-game system,?Meta owns a?blue-and-white letter ‘X’?for fields including software and social media.
• Musk is on bad terms with?Microsoft-backed OpenAI, while Meta recently launched its own microblogging app Threads that has been?termed a ‘Twitter killer’; Twitter has also threatened both?Meta?and?Microsoft?with legal action.
• However, other companies are unlikely to pursue legal action against Twitter unless its new image encroaches on their brands and graphics.

On that note:?Efforts to change the signage on Twitter’s San Francisco headquarters were?interrupted by local police?due to a misunderstanding regarding permissions for crane usage at the Twitter headquarters.?

• While officers were “able to determine that no crime was committed,” the removal of the sign remains incomplete.

What else:?CEO Linda Yaccarino has?outlined a vision for ‘X’?to become a site for audio, video, messaging, payments, and banking, in line with Musk's aspirations to build a super app. However, this change is expected to require a complete rebuilding of the platform's cultural and linguistic influence.?

• Insider Intelligence analyst Jasmine Enberg said, “Twitter’s rebrand is a reminder that Elon Musk, not Threads or any other app, is and has always been the most likely ‘Twitter killer’.”

ICYMI

• China has?removed Qin Gang as foreign minister?after a month-long unexplained absence from public view and replaced him with his predecessor, Wang Yi.
• Byju’s investor Prosus has?publicly expressed disappointment?with the edtech company’s governance and reporting structures.
• Poll-bound Rajasthan is witnessing a?political controversy over a red diary?that could allegedly “expose” Chief Minister Ashok Gehlot.
• Worldcoin, a?cryptocurrency project founded by OpenAI CEO Sam Altman, officially launched on Monday.
• Digital payments platform PhonePe has introduced?a new feature that allows users to pay their income tax?through its app.
• ‘Barbie’ and ‘Oppenheimer’ combined to deliver a?record-breaking weekend for the film industry, revitalising the slumping sector.
• Former prime minister Jawaharlal Nehru reportedly?offered J Robert Oppenheimer Indian citizenship?in 1954.