Sri Lanka on life support

Also in today’s edition: Coming soon: Seamless texting; The grift that keeps on giving; Sony ups its game; India bets on satcom

March 31, 2022 • Estimated Reading Time: 13 minutes

Good morning! Remember Motorola? For a company that defined the mobile phone at the turn of the century, Motorola suffered near oblivion ever since Steve Jobs held that iPhone out to the world. But now, after changing hands twice (Google first and then Lenovo) over the last decade, Motorola is the number three smartphone manufacturer in its once home—the US, according to Counterpoint Research. That's a comeback of sorts.

In today's episode, Farheen Khan talks about how the European Union wants to interconnect messaging apps across the board. With ease comes the threat to end-to-end encryption. We also highlight Sri Lanka's economic crisis. The island nation is currently cash-strapped, with a range of shortages spanning from fuel to medicines.  Tune in to The Signal Daily!

The Market Signal*

Stocks: Benchmark indices ended on a positive note on the penultimate day of FY22. The BSE small-cap index has risen 35% in 2022, reflecting the return of investor confidence and subsiding war jitters. Yet, FIIs took out $18.76 billion from Indian equities this fiscal year compared to a net investment of over $37 billion in FY21, the Business Standard reported.  

TECH POLICY

Europe Wants To Change The Way You Text

Can you imagine a future where you could text a WhatsApp user from say, Signal or iMessage? Europe is looking to do just that. Last week, European lawmakers approved the Digital Markets Act and tucked somewhere in the wide-ranging legislation is the issue of “interoperability” of messaging apps.

BLUF: Large messaging platforms (WhatsApp or Facebook Messenger or iMessage) should be prepared to interoperate with smaller messaging platforms. That includes exchanging files, video calling and related services. The core idea of the law is “to give users more choice”. 

Not all cool: That future doesn't exist. If implemented, privacy could be an immediate casualty. End-to-end encrypted interoperability might be impossible or at the least involve diluting encryption techniques, cracking open these platforms to malicious actors. 

CRYPTOCURRENCIES

The Ax(i)e That Hangs Over Blockchain Gaming

In what’s the biggest crypto hack yet, Ronin—the network used for the Andreessen Horowitz and Mark Cuban-backed blockchain game Axie Infinity—lost $625 million in ether and USDC stablecoins. The hack took place on March 23 but was discovered this week, when a player tried to withdraw ether through Ronin.

Say what?: Ronin is a communication bridge or ‘sidechain’. Axie Infinity developer Sky Mavis created it so players could convert crypto into tokens for in-game purchases. Cross-chain bridges have a history of vulnerability.

Blooper: The hacker exploited a security loophole by Sky Mavis that allowed a community-owned (Axie DAO) validator to distribute free transactions. Although that contract ended in December 2021, the permissions were never revoked.

What now? Most players hail from the Philippines. Sky Mavis says it’s working with law enforcement to recover funds; until then, those holding onto (now depreciated) tokens have no ether to turn it back into. It doesn’t help that the Axie Infinity ecosystem has predatory practices.

SOUTH ASIA

Sri Lanka On The Brink

Sri Lanka has sought a fresh credit line of $1 billion from India to buy essentials for its citizens, taking the total financial assistance from New Delhi to $2.4 billion. It has also handed over hybrid power projects on three islands off Jaffna, replacing the Chinese.

Turning to neighbours: India and China have been helping out the island nation after a steep fall in foreign exchange reserves pushed it to the brink of default. Lanka has requested China for another $2.5 billion over and above the $2.8 billion that Beijing has already given. Pakistan, whose government is on the brink of collapse, and Bangladesh are also helping out with assistance of $200 million each.  

Fuel and cooking gas are scarce and prices of food are soaring. Power cuts have gone up to 13 hours daily. Those who can are fleeing the country. 

The Signal

No one wants an imploding economy in their backyard at a time when war in Europe has plunged the world into uncertainty. The global economy was in the doldrums anyway. A humanitarian crisis in Sri Lanka would impact the whole region and India in particular. Refugees have already begun to arrive on the southern shores. The aid is only a palliative and not the cure for Lanka's economic woes. It is too dependent on tourism and tea exports. Although the helping hand from neighbours would keep it afloat for now, it is likely to be a long haul for the Rajapaksa government.   

GAMING

Sony Rolls Its Subscription Dice

PlayStation Plus, Sony’s long-awaited upgrade to the gaming experience, is here. Offered in three tiers, it combines its existing services but might not really stand up to Xbox Game Pass. 

What’s in the box? PS Plus includes online multiplayer access, PS4 and PS5 games, streaming and larger libraries as you move up the tiers. 

No same day: PS Plus won’t include same-day launches, a key differentiator. PlayStation CEO Jim Ryan believes it will break the virtuous cycle for studios. But Xbox believes making the latest titles available widens the player funnel for the console. It is similar to the choice for movie studios: release movies in theatres first and later take it to streamers or both simultaneously. 

In the race: Sony is playing catch up. After Microsoft acquired Bethesda and Activision Blizzard, it bought Bungie for $3.6 billion. Sony’s virtual reality headset PSVR 2 is a potential chess move against Meta. 

COMMUNICATIONS AND INTERNET

Beam It Down To The Borough

A new satellite telecom policy expected to be announced in early April could potentially be a game-changer for rural broadband connectivity and consequently for e-commerce. 

Biggies line up: A slew of ventures, including Bharti’s OneWeb and Hughes Communications, Tatas Nelco and Telesat, Reliance Jio Platforms and Luxembourg-based SES, Elon Musk’s Starlink and Amazon’s Project Kuiper, are on the verge of launching satcom services in India. Starlink started pre-selling the service last year but was ordered to stop for want of a licence. Nelco already provides satcom to enterprise customers. 

Digging trenches: Although more expensive, satcom is a quicker way to reach distant villages compared to laying hundreds of kilometres of optic fibres. Bharat Broadband Network’s (BBNL) ambitious project BharatNet to connect six lakh villages has been marred by delays and patchy implementation. BBNL will now be merged with loss-making national telecom carrier BSNL. 

FYI

Big Tech moves: Google was fined €2 million by France’s Commercial Court over abusive practice towards developers. Apple has blocked a class-action antitrust lawsuit filed by some iPhone users over its App Store fee. Meta has halted plans for a mega data centre in the Netherlands amid opposition from the government.

Ka-ching! Games24X7, the company behind RummyCircle, has turned unicorn with a valuation of $2.5 billion after raising $75 million in its latest funding round. B2B food supply platform FarMart closed a $32 million round led by US venture fund General Catalyst.

Payment switch: The Indian government is considering Russia’s SWIFT alternative called SPFS for bilateral payments for oil and weapons purchases. The proposal includes deposit of roubles into Indian banks before conversion to rupee, and vice-versa.

Paused: Chinese companies are putting the brakes on public listings of $9 billion due to the country’s biggest Covid-19 outbreak in two years. Indian startups are following suit owing to “geopolitical headwinds”.

Crackdown redux: China intends to place new restrictions on its live-streaming industry, including caps on both sending and receiving tips such as virtual gifts.

Battery fire: A Pure EV electric scooter caught fire in Chennai. This is the fourth incident in four days and the Indian summer has just begun. 

Spoke in the wheel: The Competition Commission has reportedly raided tyre companies across India allegedly for cartelisation. 

FWIW

Relics on sale: A nearly 32-foot illustrated painting depicting a historic victory of Mysore ruler Haider Ali and his son Tipu Sultan over the East India Company in 1780 is up for auction in London for a whopping $485,000. Only three such paintings exist. By the by, an unpublished booklet of poetry written and illustrated by Tupac Shakur when he was just 11 as a gift to his imprisoned godfather, is up for sale and is estimated to fetch as much as $300,000. 

The beacon: Covid-19 has tightened its grip over Hong Kong, its deadliest outbreak in two years. Expats and doctors are looking to an Australian stay-at-home dad for clarity. The account @tripperhead on Twitter has been rolling out regular updates about the pandemic as Hong Kong continues to be isolated from the rest of the world. It takes him up to 14 hours to collate and share data from government press conferences. 

The boom’s gone: Poof! Tennis legend and parenting guide author Boris Becker says his Wimbledon trophies have vanished. Declared bankrupt in 2017, the six-time Grand Slam winner is facing trial for failing to hand over the silverware in lieu of debts. The hearing was disrupted on Wednesday after two jurors tested positive for Covid-19.

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