What Netflix’s Reed Hastings learned from Ambani, Mittal

Good morning! Brace for impact, AI-fuelled dystopia is here. In the US, Taylor Swift’s sexually explicit images circulated widely on X. Swifties quickly responded and inundated the platform with real pictures of the popstar under the hashtag, #protecttaylorswift. Even the White House got ‘alarmed’ over the news. In India, The Economic Times reports that the infamous Mahadev betting apps are online again and are using deep fakes of celebrities like Sachin Tendulkar to promote their apps. In a year of world elections, this honestly feels like a trailer.

Soumya Gupta and Adarsh Singh also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: Oil prices jumped after Yemen-based Houthis struck a tanker carrying Russian oil for trader Trafigura. It’s the first time Houthis have scored a major hit in the Red Sea trade passage. The US also suffered its first major loss when three troops at a small outpost in Jordan were killed in a drone attack. 

Investors are awaiting the fourth quarter performance of Apple, GM, and Boeing, all of which are going through rough patches. Alphabet, Microsoft, and Amazon results are also lined up this week. 

The Federal Reserve’s rate-setting meeting and India’s interim budget are key events investors are looking forward to. Foreign portfolio investors in India have sold ₹24,700 crore (~$3 billion) in January as US interest rates have turned attractive. 

Asian stocks were upbeat in morning trade. The GIFT Nifty indicated a positive opening for Indian equities too.

TECH

The Tide’s Turning Against Tim

Apple is going through it this year, what with setbacks with the Apple Watch and its mixed reality headset, the Vision Pro, to its years-long efforts to crack autonomous driving. Now, The Wall Street Journal reckons that the strategy Apple chief Tim Cook executed to turn the company into a $3 trillion behemoth could work against him.

Apple’s walled ecosystem, which inevitably makes developers and consumers suffer “high switching costs”, is unravelling. US and EU regulators directed Apple to allow alternative payment methods and app sideloading, but its so-called compliance is attracting fierce pushback.

Apple’s hardware business is either flat or declining, a vulnerability laid bare in its latest earnings: services account for over $22 billion or a quarter of the company’s overall revenue. Couple that with the raft of executive departures across its hardware divisions, and the rest of 2024 may prove to be even more challenging for Cook.

🎧  Apple's walled garden gets a side gate. Also in today’s edition: Taylor Swift is the latest victim of AI deepfakes... and she’s doing something about it. Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts. 

FOOD

Sharks Are Millets Of The Sea

Indians are falling in love with sharks in a way the creatures will not find amusing. A study by the non-profit InSeason Fish has revealed that shark meat consumption is on the rise in India. 

Long restricted to diets of niche and poor coastal communities, sharks are increasingly finding their way onto menus of upmarket restaurants, which also have an online clientele. Most restaurants offer ‘baby sharks’ as a marker of their authenticity.

Change afoot: Sharks are among the most overfished species in the Indian seas. Most of them are usually bycatch, but consumption demand is changing that. While some species of sharks have legal cover, there’s no blanket ban as such. 

Like millets, shark meat becoming a choice for richer populations for their health benefits has upped its cost, pricing out poor consumers who are shifting to rays. That could lead to over- consumption of both rays and sharks. 

PHILANTHROPY

Baby Bill Gates Buys A Mountain

A year since Netflix co-founder Reed Hastings left the firm, he’s working on his post-retirement plans. That includes funding internet and clean energy projects in Africa while building a luxury ski community on Powder Mountain, according to The Information. Hastings is hoping the joys of living on a private mountain (where he’s selling plots at $2 million apiece) will invigorate him to become, in his words, “baby Bill Gates”. 

Ambani and Mittal: Hastings is inspired by how Mukesh Ambani used Jio to flood India with cheap, high-speed data, marking a watershed moment in the country’s internet economy. Rival Sunil Mittal’s Airtel is replicating the Jio model in Rwanda, offering subsidised 4G smartphones and 4G data along with free voice and SMS. Hastings is funding the project. 

POLITICS

Quota Fire Lit Again

The next few months leading up to the general elections could be dotted with protests and disruptions in India’s most industrialised state, Maharashtra, after the government decided to carve out a part of the existing 27% Other Backward Caste (OBC) quota for the Maratha community. 

It has upset OBC groups who have vowed to oppose it tooth and nail, in streets and courts. While chief minister Eknath Shinde claimed he had fulfilled his promise, his cabinet colleague Chhagan Bhujbal has begun devising a strategy to oppose it. 

Switcheroo: In Bihar, the hotbed of caste politics, chief minister Nitish Kumar has dumped the INDIA grouping to return to the BJP-led National Democratic Alliance. Kumar resigned as chief minister and dissolved the government on Sunday morning, only to reclaim his position with new allies and ministers in the evening. OBC quotas are likely to be a key issue in the upcoming national elections.

SEMICONDUCTORS

Giants’ Gain, Underdogs’ Pain

The going’s tough for Joe Biden in the run-up to the November elections, so it comes as no surprise that the US president is keen to drum up support in two key states: Arizona and Ohio, which is where global chipmakers are looking to build factories.

Incentives to boost local manufacturing under the 2022 Chips and Science Act have been slow to rollout. Not much longer though. The US may announce multibillion-dollar chip grants in March. The likes of Intel, Samsung, and TSMC are expected to benefit to the tune of having up to 15% of their local production and labour costs covered.

But: The AI rush that’s led to a surge in chip stocks (looking at you, Nvidia and AMD) masks a broader slump in the chip business. Semiconductor companies such as ST Micro and Texas Instruments, which make components for traditional industries, have reported muted demand.

FYI

Emperor of luxury: LVMH chief Bernard Arnault has vaulted to the top of the Forbes list of richest people on earth with a $207.8 billion fortune, eclipsing Tesla boss Elon Musk’s $204.5 billion pile. 

Pink slips: Defence contractor Lockheed Martin, which employs 122,000 people worldwide, will cut 1% of its workforce.  

Margin tear: Lower factory-gate prices have resulted in the profits of Chinese industry shrinking 2.3% in 2023. 

Death of a pioneer: Veteran banker Rana Talwar (76) has passed away. Talwar became the first Indian to helm a global bank when he became chief executive of Standard Chartered Bank in 1996.

Chopper’s stop: Airbus has signed a deal with the Tata Group to make its H125 single-engine helicopters in a factory set up by the latter in Vadodara, Gujarat.   

Cutting the cord: Binny Bansal, the remaining co-founder on Flipkart’s board, has resigned citing conflict of interest with his new e-commerce venture OppDoor, which he launched in late 2023. 

Let’s encash it: Piramal Enterprises is set to sell its 20% ownership in Shriram Investment Holdings to Chennai-based promoters’ holding company Shriram Ownership Trust for ₹1,440 crore (~$173 million).  

THE DAILY DIGIT

$1.9 trillion 

The damage to the US economy due to productivity loss caused by workplace unhappiness among employees in 2023. (Bloomberg) 

FWIW

Game of prediction: Evolution is not an opinion and now there’s proof that it’s not even unpredictable. Richard Lenski, an evolutionary biologist at Michigan State University, has been observing 12 populations of identical bacteria (Escherichia coli) for 35 years now. The 12 populations lived all this time on water, salts and glucose in independent containers; however, in their 31,500th generation, one of the colonies learned to feed on sodium citrate which they don’t usually eat. This gave rise to a new de facto species, different from the other populations. Lenski and his team had predicted 75% of the first adaptive steps of the bacteria, which has helped them conclude that evolution is predictable… in the short term… under clinical conditions. Still, pretty cool in our opinion. 

Introvert economy: That’s what people are labelling the post-pandemic economy in the US. As Gen Z enters the workforce and makes their presence felt, businesses are responding to their needs too. That means 5:30 PM dinner reservations, online shopping, very less drinking, less socialising and more TV/gaming/online dating than IRL. Cloth retailers are pivoting to athleisure to cater to this new reality and restaurants are investing more in delivery and cloud kitchens. On the flip side though, an introverted generation is a lonely one too… no matter how healthy they are. A faustian bargain essentially. 

Mob wife aesthetic: That’s the latest trend on TikTok. People are recreating the said aesthetic by applying heavy eyeliner, donning shiny jewellery and a fur coat on a black dress. While that ensemble is pretty close to perfection, there’s one thing missing… attitude! The trend is gaining such traction that it also garnered a response from Francis Coppola on his Insta. But why the sudden obsession? Some believe that it’s an HBO ploy to promote the 25th anniversary of its cult-show The Sopranos. A mob talker for promoting a mob show? Classic!