Ambani vs Birla

Good morning! The north Atlantic Ocean just drank $401 million like a fish. That was the value of the 4,000 Volkswagens, Bentleys, Audis, Porsches, and Lamborghinis aboard the Felicity Ace. The cargo vessel was on fire for weeks before a Dutch company tried to salvage it—in vain. The disaster, which was due to the high number of electric vehicles (EV) on board, has prompted debates over precautionary measures for EV transport.

In this episode, Farheen Khan talks about the curious case of Singapore-based Sea Ltd. The consumer internet company saw its market fortunes nosedive from a peak value of $132 billion in October last year, some of it due to a recent app ban by the Indian government. She also decodes an incoming rivalry between two traditional conglomerates — Reliance and Aditya Birla Group — in an unlikely terrain: high fashion. This is quite an episode! Tune in to The Signal Daily!

The Market Signal*

Stocks: Benchmark indices ended in a loss as geopolitical tensions escalated. Brent crude rose to $111.56 per barrel, a seven-year high. The Russian rouble hit a new low.

The Convo Around Data Protection Bill Goes On

Global technology companies including Microsoft, Apple, Amazon, Google and Dell have banded together to voice their concerns over the much-awaited Data Protection Bill. The group has written to IT minister Ashwini Vaishnaw over the Joint Committee of Parliament recommendations.

What's the matter? The concerns include removing provisions on non-personal data and applying restrictions on data processing among others.

Will they, won't they? The Data Protection Bill has been pending in Parliament since 2019. Some reports even hinted at the government junking the existing bill. Meta Platforms and Twitter have also voiced their apprehensions.

What now? Last week, Vaishnaw revealed that the Bill may be tabled in at the monsoon session after rolling out a few kinks. However, in February 2022, Vaishnaw’s ministerial colleague, Rajeev Chandrasekhar called for a "new digital law", assuring that the government will release the Data Protection Bill only after talking to "various stakeholders.” Which version do we go with? 

Biden And Xi Agree On Social Media Addiction

It took until his last State of the Union address for former president Donald Trump to address the growing power of big technology companies. Joe Biden did it in his first, with Facebook whistleblower Frances Haugen in the audience.

How? In a speech that referenced a larger mental health crisis among the American youth, Biden vowed to "hold social media platforms accountable for the national experiment they're conducting on our children for profit." This elevates the regulation of these companies as a key policy agenda for the Biden administration. Apropos, attorney generals of seven US states are investigating TikTok for its impact on teenagers and children.

Chinese parallel: In doing so, Biden has taken yet another leaf out of China's playbook. Much like antitrust and algorithmic accountability. There's also the UK which wants to limit the data these companies gather on younger users, particularly children. Curiously, this also comes at a time when Meta-owned Instagram wants users to spend more time on its platform, amid slowing growth and an all-out rivalry with TikTok.

Ambani And Birla Duke It Out For Fancy Pants

Reliance Retail—through luxury arm Reliance Brands Limited (RBL)—has acquired a majority stake in Abraham & Thakore. This is the conglomerate’s fifth foray into luxury fashion in the past year alone, after Ritu Kumar and Manish Malhotra; it also snapped up joint ventures with designers Anamika Khanna and Rahul Mishra.

Pacman: RBL has aggressively ramped up its portfolio since its inception in 2007. After initial partnerships with brands such as Diesel and Brooks Brothers, it acquired a near 50% stake in Ge­nesis Luxury Fashion. Genesis holds the India licences for Armani, Burberry, and Jimmy Choo, among others. In 2018, RBL bought into Raghavendra Rathore and Satya Paul.

The Signal

It’s knives out for Reliance and the Aditya Birla Group, whose Aditya Birla Fashion and Retail Limited (ABFRL) competes with RBL. In 2019, ABFRL bought a majority stake in Shantanu & Nikhil and acquired artisanal lifestyle retailer Jaypore. Two years later, it got Sabyasachi Mukherjee and Tarun Tahiliani on the roster.

Value players (Aurelia, Biba, etc.) command 40% of India’s organised ethnic wear market. Judging by the Indian designers they’ve partnered with, RBL and ABFRL are battling for the 60% that spans premium and luxury ethnic wear.

However, ABFRL has a different strategy for international brands. Barring Hackett London, Fred Perry, and Ralph Lauren—which operate in the accessible luxury space—its strategic partnerships with Forever 21, American Eagle, and Reebok are fast fashion-focused.

Apple Joins The Chorus

Apple is the latest US tech giant to shun Russia. The move comes after Ukrainian vice prime minister Mykhailo Fedorov appealed to the tech giant to pause product sales and shut down the App Store.

Deets: Apple has halted purchases of Macs, iPhones, iPads on the website, and barred RT and Sputnik from its App Store outside Russia. It also disabled live and traffic incidents in Apple Maps and limited Apple Pay, among other services. The latter comes in the wake of Visa and Mastercard suspending services on Tuesday. Apple hasn't paid heed to Fedorov's second appeal: shut access to the App Store.

Apple's rare public stance against Russia comes at the right time, given its complicated history in the country. One wonders if Apple would take a bullet for Taiwan against China where it enjoyed a record holiday quarter: a 21% growth in revenue, to be precise.

Exodus: Nike, Exxonmobil, Boeing, Harley Davidson, Oracle, and Ford have ceased Russian operations. For now.

Yuan Is No Dollar, CIPS Is No SWIFT

China’s “limitless friendship and endless cooperation” with Russia is getting tested as the latter’s invasion of Ukraine stretches on longer than expected.

An “extremely concerned” Chinese foreign minister Wang Yi held talks with his Ukrainian counterpart and “deplored the outbreak” of conflict. China, however, clarified that it won’t join the West in imposing sanctions against Russia.

Chinese backstop: Some analysts say that China has the ability to step in to help Russia, offering its own financial muscle and transactions infrastructure to ride out the sanctions. They say the digital yuan can be used in place of dollars, and that the Cross-border Interbank Payment System (CIPS) could substitute for the SWIFT interbank messaging system.

Can it hold? But CIPS is puny. SWIFT carries 50 million messages daily from its 11,000 members moving $5 trillion worldwide, while CIPS sends out a mere 15,000 messages a day. RippleNet does more volumes than that. In fact, as the war drags on, cryptocurrencies are finding a new role as conflict currencies. Incidentally, Chinese intelligence believes that the sanctions will backfire.

Curiously, the Indian government is exploring options to outmanoeuvre the SWIFT messaging ban on some Russian banks.

FYI

Tanking shark: An internal governance review by fintech company BharatPe found its cofounder Ashneer Grover and his family members guilty of fraud. The company has also removed Grover from all positions.

More dough: Venture capital firm Accel has raised $650 million for its seventh fund, which will back early, pre-seed, and seed startups in India and Southeast Asia.

Doubling down: Netflix will acquire Finnish mobile game studio Next Games for $72 million as part of a deeper push into gaming. Rival Amazon has launched Luna, its cloud-based gaming service with Prime and Twitch integration, in the US.

Restructure: Automaker Ford is reorganising its operations by creating two divisions—one for its conventional ICE car business, and the other for electric vehicles and software.

Freefall: Singapore-based Sea Ltd lost more than $130 billion in market value from its peak in October last year. Sea's Yanjun Wang also named the "unfortunate" India ban as one of the reasons for the plummet.

For sale: Chelsea Football Club has been put up for sale by Roman Abramovich. A consortium featuring Swiss billionaire Hansjörg Wyss is reportedly interested in buying the London club.

Partnering: Urban Company will allot ₹150 crore worth stock options for its partners via a ‘partner stock options plan.’

FWIW

High stakes: The most frequently visited venue on the metaverse remains the casino—to gamble crypto. The poker tables on Decentraland casinos have never been busier. Crypto risk and online betting remain a concern among US regulators. But the folks behind these games aren’t worried. Much like real life, gambling remains a grey area here.

Londongrad no more? London is proposing anti-money laundering laws, which aim to crack the whip on foreign wealth. This won't go down well with Russia's billionaires who call London their home. The Russia-Ukraine crisis and sanctions against Russian elites aren't helping. In related news, the oligarchs are now heading to the Maldives to take a break.

Decentraland: Papua New Guinea has a peculiar problem at hand. A new island that cropped up has become a centre of dispute among communities. How was the island formed, you wonder? The pollution from a palm oil factory could have something to do with it.

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