| The last decade has seen what is arguably one of the most dizzying periods of innovation and competition in technology. The next decade will most likely look very different, unless regulators in the world’s largest economies—like the US, India and Indonesia—decide to take on the growing concentration of tech power. Amazon, Apple, Facebook, Google and Microsoft are together sitting on cash reserves of $557 billion, says Mike Isaac in the New York Times. And while both their smaller and nimbler competitors as well as entire economies struggle to cope with the multi-year impact of Covid-19, the tech giants Amazon, Apple, Facebook, Google and Microsoft see an opportunity to entrench their power even further as they have become near-essential services. |
| The [their] expansion is unfolding as lawmakers and regulators in Washington and Europe are sounding the alarm over the tech giants’ concentration of power and how that may have hurt competitors and led to other issues, such as spreading disinformation. This week, European Union officials were preparing antitrust charges against Amazon for using its e-commerce dominance to box out smaller rivals, while Britain began an inquiry into Facebook’s purchase of the GIF company. […] In doubling down on growth in a time of economic pain, the largest tech companies are continuing a pattern. In previous recessions, those that invested while the economy was at its most vulnerable often emerged stronger. In the 1990s, IBM used a recession to reorient itself from a hardware company into a software and services company. Google and Facebook both rose out of the dot-com bust about 20 years ago. The Economy Is Reeling. The Tech Giants Spy Opportunity, New York Times |
| If the combination of tens of billions of dollars of free cash, hundreds of millions of existing users for their products, and armies of behind-the-scenes lobbyists and PR firms wasn’t enough to deter ambitious startups from taking on these giants, add marriages of convenience with the largest local players to the mix. For instance, Facebook’s investment in Gojek in Southeast Asia, or in Jio Platforms in India. Imagine the “kill zone” that exists around a Facebook-Gojek or Facebook-Jio combine. There’s a reason why there’s been a virtual parade of global PE and sovereign investors pumping billions of dollars into Reliance’s Jio Platforms each week, topping Rs 1 trillion at last count. Because not only is Jio India’s largest mobile operator, but it also has Facebook and Microsoft as partners. There is no alternative. Unless the alternatives are, say, rumoured Google-Vodafone-Idea or Amazon-Airtel combines. That task would be up to India’s lead competition regulator, the CCI. Anupam Sanghi, a competition lawyer, covers these issues in his piece for The Wire: |
| There are a number of issues at play here. Firstly, the strong network effects of digital platform economies. Second, the relevance of volume and variety of data as a key factor to provide high quality service and how that serves as a competitive advantage. Third, whether the mere combination of both types of user data (WhatsApp and Jio) will allow the new entity to achieve a position that could not be replicated by competitors leading to foreclosure of the market(s). The success of the business model of various (multi) two-sided virtual platforms like Google, Facebook, and Uber among others depends on collecting user data. The data as input may be used to get ad-revenue or improve internal algorithms for the paid side of the platform. The potential of data analytics gives a crucial competitive advantage to the advertisement-driven business model. Facebook-Jio Deal: What India’s Competition Regulator Will Have to Consider, The Wire |
| Malls open while shops remain shut? Samiran Chakrawertti Earlier this week, some rather confusing headlines about malls in the north Indian state of Uttar Pradesh made the news. The malls were reopening whilst all the shops in them would remain shut. Fortunately, there was a sensible explanation at hand to dispel the confusion. Sanjay Gupta, state president of traders’ association Adarsh Vyapar Mandal, told IANS that shopkeepers had requested mall owners to waive rent and maintenance fees for the lockdown period. The mall owners said no. As a result, the association said a majority of shops in these commercial hubs in the state remained closed on June 8 in support of their demands on the issue. Gupta said that shops would remain closed until their demands are met. This isn’t all, the shopkeepers want the rent and maintenance fees to be slashed for the next 12 months as they suffered significant losses owing to the coronavirus-induced lockdown. You might wonder why malls would choose to open and incur operating costs if they knew shops were likely to remain closed. The timing of the decision to open malls across the country—while cases continue to mount and indoor air conditioned spaces are particularly vulnerable—has raised eyebrows. As it turns out, the fine print in some rental agreements states that commitments to long-term leases can be opted out of should the mall remain shut for 90 days or more, said an executive at a fashion retailer which has several outlets in Delhi. We’re currently around 80 days removed from when the lockdown kicked in. Even shops that have opened in malls elsewhere in the country are reporting dramatic reductions in footfalls and revenue. |
| The Covid sanitation dovetail Olina We’ve all been reading enough news to figure out that Covid is a fire roaring through a house of wax. Well, houses, to be more precise. According to an IndiaSpend article, almost 50% of households share a common drinking water source, and 41% use common toilet facilities. For a virus that spreads through touch and close contact, this is exactly the kind of fodder it needs to rip through a community. |
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| According to an IndiaSpend article, almost 50% of households share a common drinking water source, and 41% use common toilet facilities. For a virus that spreads through touch and close contact, this is exactly the kind of fodder it needs to rip through a community. Reverse migration, due to Covid, might be making things even more difficult. Migrant workers, who fled their temporary homes in cities, have predictably carried the virus to more remote parts of the country. Chandra Ganapathy of WaterAid India points out that open defecation could be extremely harmful if it is discovered that Covid can spread through the fecal-oral route. The implications don’t end with open defecation though. “Even in households where toilets and bathrooms exist, the load may be very high [due to the recent reverse migration] and it may become difficult to maintain proper hygiene and sanitation,” said Ganapathy. “This may be increasingly important in the case of confirmed COVID-19 patients and those in home quarantine.” |
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| Level up, not down, to equality Olina It was a busy Sunday afternoon for a group of parents, private schools, and educators in the city of Bengaluru. A twitter discussion—#Righttolearn—saw pointed criticism of the Karnataka government’s recent ban on online classes. The parents protested the ban, calling it “bureaucratic dictatorship” by the state government. Ironically, there is no ban on the government’s own broadcast edtech TV channels or online content. |
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| The ban, seemingly, is overkill. It’s also a reaction to how quickly the economic and social fault lines of the physical world transferred online—access to tech, quality of teaching, and good bandwidth for an immersive learning experience. But a blanket ban is too wide a hammer for the problem. In fact, philanthropist Rohini Nilekani argues the opposite in a Deccan Herald opinion piece. |
| “We need plans, not bans. For the state, bans are the easiest exercise of its authority. But it is a blunt, ineffective instrument. This ban will not prevent the elite from giving their children the best online resources the world can offer. It will not prevent any children from accessing too much screen entertainment. […] Instead, the government could post guidelines on the size of the online class, the amount of screen time children should have, and the preferred methodologies for making the screen time engaging. Online classes need not count for academic grades; they could be voluntary, not mandatory. There are many possibilities for positive regulation. We cannot level down in the name of equality. We must level up.” Lockdown: Online Classes – Let’s plan, not ban, Deccan Herald |
| Nilekani’s main argument is that while online isn’t a perfect medium yet, it’s a canvas for future possibilities. Especially when it comes to accessing more quality teaching. Otherwise, warns one parent, the inevitable might happen. |
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| If the ban continues, the government would have unwittingly pitted the online and (previously) offline world in a battle for more users. The challenge is, one side knows how to play this game very well. Is it time to regulate them too? |
| India has a wheat-ish challenge Samiran Chakrawertti Ever since the lockdown began, some people turned into master chefs to sate their hunger (or just pass the time). Others turned to shortcuts like readymade rotis and parotas to fill their bellies while saving time and effort. If your tastes veer towards parotas, the flaky flatbread, rather than simple rotis (just flat bread) be prepared to shell out a bit more. Parotas are not rotis, according to the Authority for Advance Rulings, which ruled against the applicant, ID Fresh Foods. Parotas will be subject to a Goods and Services Tax rate of 18% and will not be considered in the same category as ‘Khakhra, plain chapati or roti’ which are taxed at 5%. The logic is that ‘(rotis) are already prepared or completely cooked products. On the other hand, parotas need to be heated before consumption.’ This nuanced reasoning found no vocal takers, with some comparing it to a previous litigation in India involving Nestle’s KitKat bars— the court had to rule on whether it was a wafer or a chocolate—and a well-known case involving Jaffa cakes in the UK. In the Kitkat case, in 1999, the court ruled in favour of Nestle at the time, saying it was a wafer. Soon after, the rules were amended to increase the tax rate on chocolate-covered wafers, so Nestle’s joy was short-lived. In a similarly quirky 1991 case in the UK, tax authorities challenged British snack food maker McVities’ contention that Jaffa cakes were cakes and not biscuits. That’s because, for some reason, chocolate-coated cakes attracted no value added tax (VAT), while chocolate-coated biscuits attracted a 17.5% VAT. That case was finally decided by some pretty airtight logic. The court ruled that when biscuits go stale, they turn softer, but when cakes go stale they turn harder. Jaffa cakes indeed turned harder when they were left outside, so the court ruled in favour of McVities. |
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| Image source: Eldriva |
| In the roti vs parota case, a clarification made its way to the media over the weekend, attributed to an unnamed ‘government official’. While frozen or preserved parotas cannot be considered a staple food item and will be taxed at a higher rate as a luxury item, ordinary parota served at a restaurant or for takeaway would attract a 5% rate just like plain roti. But what does that mean for frozen or preserved rotis? The suspense is palpable. |
| Corona cycleways Jum Lockdown measures may be paving the way for the Philippines to finally become bike-friendly. With public transportation operating at limited capacity, Filipinos have been turning to bicycles to get to work in recent weeks. That has forced authorities to install bike lanes along major Manila roads, which are super dangerous for two-wheelers. Motorcycle riders are the most frequent victims of vehicular accidents in the country, according to authorities. If mechanically propelled motorcycles are vulnerable, bicycles are even less protected. That’s why bicycles were largely banned from major roads before the pandemic. The new bike lanes are only for the duration of the quarantine. But if all goes well, this could lead to something permanent. Who knows, it may even give birth to a new industry—bike sharing. Groups have long been advocating for cycling to become a proper mode of transportation in the country. Not only is it environmentally friendly, it also has a good chance of easing Manila’s traffic congestion, said to be the second worst in the world. With coronavirus, bikes also allow commuters to exercise social distancing. |
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| Image source: Daisy Chen/Unsplash |
| It’s a long way off, but if bike sharing does emerge, hopefully the Philippines avoids the pitfalls seen in China, where piles of impounded and abandoned bicycles have become a familiar sight. |
| “Gradually, and then suddenly” Rohin The quote is from Ernest Hemingway. The graphic is from Gautam John, a subscriber, who combined two important systems thinking models – the Iceberg Model and Pace Layers framework. |
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