1. The big news late last week was the ruling of the US District Judge Yvonne Gonzalez Rogers in the case between Apple and games maker Epic, that directed Apple to give developers in the US bypass the App Store's in-app payment tool by including links or directions to "purchasing mechanisms" outside of the platform. This deprives Apple off the monopoly position in the very high margin (15-30%) and more than $60 billion of App Store transactions per year. Apple made $6.3 bn last year from in-app purchases and subscriptions.
Epic Games CEO Tim Sweeny has expressed his disappointment, saying that this is not a victory for either developers or consumers. Apple has proclaimed victory. It will be a relief to Apple that the judge has not inviolated the prevailing anti-trust paradigm by ruling that "Apple is not a monopolist under 'either federal or state antitrust laws'". Besides, the Judge also said that, "Apple provides a safe and trusted user experience on iOS, which encourages both users and developers to transact freely and is mutually beneficial."
The judge also didn’t force Apple to change its fees or let third-party app stores on its platform, which would have been a far larger blow to the company’s revenue. The ruling states that Apple must let developers communicate with customers “through points of contact obtained voluntarily from customers through registration within the app.” Last month, as part of minor concessions designed to settle a class-action lawsuit with app makers in the U.S., Apple had already agreed to allow those direct communications between developers and end users. The ruling in the Epic trial only applies to the U.S., while Apple’s previous App Store changes — relating to communications and reader apps — were designed to be global... The ruling is believed to mean that users would be able to make purchases via the web, rather than having a competing payment system in apps themselves. That means Epic would need to build a website to let users make purchases and include a link to that site in Fortnite in order to comply with the rules. That’s something Sweeney appears to be implying that Epic doesn’t want to do. Epic wants a built-in payment system, not the option to steer to the web.
What it really wanted was a frictionless in-app payment mechanism that deprived Apple of its cut, rather than the ability to hyperlink to a payment website outside of the app. Epic also wanted to skirt around the App Store entirely and allow people to download its game to their devices much as they do on a PC. And it wanted the judge to declare Apple an illegal monopoly. It lost both arguments.
2. Andy Mukherjee has a story on the less reported but more important part of India's e-commerce market - the B2B aggregation between brands and wholesalers with the millions of small stores in more than 660,000 villages and over 8000 cities and towns of India.
The wholesalers rely on their knowledge of (and trust in) retailers in their vicinity. But these relationship-oriented networks are small and expensive. Throwing them wide open with digitization is the big opportunity. Leading the charge is Udaan, a startup that in five years has taken 80% of the business-to-business e-commerce market, delivering goods it stocks in 200 warehouses nationwide to more than 1.7 million retail stores in 900 cities every day. Suppliers receive their cash on time after Udaan takes their products. Retailers get credit they would have otherwise obtained at high interest rates from wholesalers. Everything happens on a smartphone app, which helps small shopkeepers build a history of reliability in payments. Banks and financiers gain the confidence to lend the required working capital, and brands get less convoluted access. From manufacturers and millers to farmers, pharmacists, hotels, restaurants and grocers, the platform has 3 million registered buyers and sellers... (Udaan) isn’t looking to fundamentally alter behavior. (They are) simply removing inefficiencies to speed up the flow of capital. This is crucial for retailers who work on 10% to 12% margins, half of what their peers in the West make. The business-to-consumer side of retail is both deeply political and booby-trapped with regulatory minefields.
In its glory days a decade ago, Evergrande sold bottled water, owned China’s best professional soccer team and even briefly dabbled in pig farming. It became so big and sprawling that it even has a unit that makes electric cars, though it has delayed mass production... The company, which was founded in 1996, rode China’s epic property boom that urbanized large swathes of the country and resulted in nearly three quarters of household wealth being tied up in housing...Evergrande might have been able to keep going if it weren’t for two problems. First, Chinese regulators are cracking down on the reckless borrowing habits of property developers. This has forced Evergrande to start selling off some of its sprawling business empire... Second, China’s property market is slowing and there is less demand for new apartments.
Investors and institutions financed companies like Evergrande because they believed that Beijing would step in to rescue if things got shaky. But that now looks likely to be upended as the government has shown greater willingness to let companies fail and have talked tough on Evergrande.
But this can be dangerous, especially in a country where three-fourth of household wealth is locked up in housing and where property market is critical to sustain activity in several sectors of the economy.
5. Denmark becomes perhaps the first country to lift all Covid related restrictions as it returns to complete normalcy after more than 75% of its population has been vaccinated twice.
6. Washington Post has a nice set of graphics on the US pandemic stimulus plans.
7. Livemint points to a study by Anarock Property Consultants about the property market in 2020-21,
Among the top seven cities, Bengaluru, Hyderabad, and Chennai saw their combined share of office leasing increase to 66% in 2020-21, compared to 47% in 2017-18... The net office absorption in 2020-21 in the top cities was 21.32 million sq. ft and these three southern cities absorbed roughly 14.06 million sq. ft. The Mumbai Metropolitan Region (MMR) and Pune absorbed 4.56 million sq. ft (21%) and the National Capital Region (NCR) took up 2.3 million sq. ft (11%). In 2017-19, 31.15 million sq. ft of office space was leased in the top seven cities. Of this, cities in the southern region accounted for 47% net absorption, the western region 33%, and the northern region 17%. In terms of new office supply too, Bengaluru, Chennai, and Hyderabad have continued to ramp up their share from 40% in FY18 to nearly 63% in FY21. Of the total new office space completion of 40.25 million sq. ft in FY21 across the top seven cities, the southern cities had a 63% share, with about 25.55 million sq. ft. The office supply share of the main western markets shrank to 19% in FY21 from 40% in FY18.
8. Interesting snippet about the composition of stock market in India and China,
As per CLSA, China’s largest firms in most industries are SOEs. Further, 91 of the 124 Chinese companies that are part of the Fortune Global 500 are government-owned enterprises. Over a one-year and two-year time frame, the top SOEs of China have gained 11 per cent and 18 per cent, respectively. The private firms, on the other hand, have soared 42 per cent and 233 per cent. Moreover, the market cap split between SOE and non-SOE in the top 50 is 45 per cent and 55 per cent, highlighting how dominant government undertakings are... To put the number in context, in India, listed SOEs (called public sector undertakings, or PSUs in domestic parlance) account for 10 per cent of India’s market cap, while private firms account for 90 per cent.
9. Latest data from the Periodic Labour Force Survey (PLFS) is disturbing news about the Indian economy,
A close look at the PLFS data is disquieting since the implication of the sectoral trends is that there has been a decline in good-quality employment opportunities since the last PLFS and workers have been forced into less remunerative and less secure jobs. The share of regular salaried workers has been declining for some years, reflecting problems with the much-touted formalisation of the economy. The proportion of the non-agricultural workforce working in the informal sector rose to almost 70 per cent. There has also been a sharp rise of 2.6 percentage points in the proportion of people working in household enterprises who receive no compensation. Women are working more, apparently — but not necessarily out of choice, since most of the increase is as unpaid family workers in agriculture. These facts are worrying enough, but the most problematic data point is surely that there has been a more than three percentage point increase in the share of workers in agriculture — the first time that this has happened in the modern statistical era. By all accounts, therefore, the PLFS indicates that India — far from modernising and formalising its economy — seems to be moving backwards in terms of the employment available.
The data should also be validated to ensure it's right. If true, it's very disturbing.
10. Data summary of the National Infrastructure Pipeline and National Monetisation Pipeline. Public finance is expected to make up 43% with state governments the highest, and with a very small share for private capital.
Interestingly, hardly any road identified for monetisation may be able to meet the benchmark of Rs 6 Cr per km.
The GoI's roads monetisation benchmark of Rs 6 Cr per km is arrived at based on the Rs 8262 Cr (Rs 6500 Cr upfront and balance over three years) bid for the 140 km Mumbai-Pune corridor over a period of 10 years.
Assuming there is a benchmark figure indicated formally for monetisation, and this figure is Rs 6 Cr perk km, it's most likely to haunt NHAI and state government agencies as they go about monetising roads. Very few roads are likely to attract traffic that meets anywhere close to this benchmark. The presence of the benchmark would be a big deterrent to officials and agencies to awarding tenders. Many would repeat tenders and time could be wasted.
This is a good example of how governments pursuing private participation as a means to enhance public revenues could struggle to meet their objectives.
11. Gurbachan Singh points to an interesting snippet about public finance in India,
In 2020-21, the taxes on oil for the GoI were about Rs 3.4 trillion, the so-called dividend income from the RBI was about Rs 1.33 trillion on an annualised basis, and the taxes on income were about Rs 4.59 trillion, according to the revised estimates. So, the collection for the GoI from the oil tax and the so-called dividend income from the RBI were together more than the entire income tax collection! With so much regressive tax being collected from the public, it is hardly surprising that the consumption has been substantially affected.
Some security analysts argued that China’s recent retaliation against Australia over its harder line — slashing imports of coal, wine, beef, lobsters and barley, along with detaining at least two Australian citizens of Chinese descent — appeared to have pushed Australia in the Americans’ direction. In response, China may extend its campaign of economic sanctions. Australia seems to have calculated that Beijing has little interest in improving relations. “I think the fear of doing this would have been much more palpable even three or four years ago, maybe even two years ago,” said Euan Graham, an Asia-Pacific security analyst at the International Institute for Strategic Studies who is based in Singapore. “But once your relationship is all about punishment and flinging of insults, frankly, then that’s already priced in. China doesn’t have the leverage of fear, of being angry, because it’s angry all the time.”
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