Reliance’s bull run as India’s acquirer-in-chief continues. Rohin writes about how Udaan and IndiaMart are about to feel the heat. Ruhi’s piece is a silver lining in the current gloomy health news cycle. Pratap breaks down why vague terminology makes for bad laws. And Netflix, writes Ben, is looking beyond streaming for its next horizon.
Udaan, IndiaMART ought to be worried about Reliance’s acquisition of Justdial
On Friday, Reliance Retail, part of India’s largest conglomerate Reliance Industries, announced the acquisition of a controlling stake in Justdial, India’s only listed search advertising company for Rs 5,719 crore (roughly US$760 million). The acquisition will mean Justdial’s founder and promoters will be left with 10.7% of the expanded capital, down from 35.32% before the transaction.
Why is Reliance buying a company that has been fighting a losing battle (albeit admirably) for years? For one, it bears the classic Reliance mark of acquiring a company that is running out of options. Justdial’s revenue last year was down nearly 30% over the previous one.
Also, I used the word losing because around 95% of Justdial’s business comes from search related advertising. For which it competes with Google horizontally and with the likes of Zomato, Urban Company and Amazon (whose India advertising business is now generating US$500 million) vertically.
Search is a brutal business and Justdial was getting squeezed horizontally and sliced vertically.
Why does Reliance fancy it then? Some answers can be gleaned from the official press release. (emphasis added in single quotes)
Transform the business. Enhance transactions. Drive commerce.
Reliance doesn’t fancy Justdial for its search business. Instead, it sees Justdial as a business ripe for transformation from search to commerce. Not B2C commerce, because that is something that even Google is still struggling to figure out.
In November last year, Justdial was on the verge of launching JD Mart, it’s B2B e-commerce portal. IndiaMART, the only listed B2B platform, sued Justdial and blocked the launch alleging copyright infringement.
JD Mart finally launched in February this year. Here’s a note dated 11 June from Devang Bhatt of brokerage firm ICICI Securities. (emphasis added in single quotes)
And B2B is clearly where it’s at. In a June 2019 story by The Ken, Abinaya Vijayaraghavan detailed Udaan’s ambitions to become the Flipkart of B2B e-commerce, with the same allure of no membership fees, zero delivery and listing charges to small businesses. At least initially.
Justdial fits into Reliance’s sprawling (sprawling, all-encompassing is the company’s only strategic world view) ambition to capture any and all parts of India’s digital commerce. Reliance is already India’s largest retailer and its largest telecom player. It has a tie-up with WhatsApp to power local commerce. What it doesn’t have are enough online transactions. Which, ironically, was Justdial’s problem, too.
That’s where the action will be.
What do bad laws have in common? They’re vague.
“If a law provides for grey areas, it is a bad law.”
This was what Justice RS Sodhi, former judge of the Delhi High Court, said to me while discussing a notorious law in 2013. The law in question was Section 66A of the IT (Amendment) Act, 2008, which was incorporated to address phishing and other internet-related crimes. Thanks to the vague and ambiguous wordings of the clause, it soon turned into a legitimate means for those in power to suppress dissent.
The clause, pertaining to online speech and intermediary liability, was eventually struck down by the Supreme Court in 2015. Cut to 2021. The nullified Section continues to be used by police officials in framing charges, and such FIRs are still entertained by the lower judiciary. So much so that the Ministry of Home Affairs issued a fresh order on 14 July 2021 to all states and union territories to drop proceedings under section 66A.
While section 66A is still in play, the government has revised and enacted another set of ambiguously-worded rules pertaining to intermediary liability. This time again it has attracted wide criticism on the expansive nature of the rules, which go beyond its remit.
‘Intermediary Guidelines and Digital Media Ethics Code 2021’, gives power to the government to direct ‘intermediaries’, which could be telecom or internet service provider, e-tailer, or social media service, to take down ‘unlawful information’ within 36 hrs of issuance of an order. The orders could be issued on grounds of:
One of the publicly stated purposes behind the revised intermediary rules has been to uphold ‘decency and morality’. Yet the government has been quick to invoke ‘public order’ to force Twitter to take down tweets related to farmers’ protests.
Nonetheless, the most appalling aspect of the revised rules is its expansiveness: it attempts to regulate non-intermediaries such as digital media and news organisations (which generate their own content, and are completely responsible for it) as intermediaries. Not only that. Through invoking ‘emergency’ clauses, the government can ban a media organisation from publishing a story.
Legal experts believe that the rules will not stand in a court of law, and it’s a matter of time before they are struck down. The following grounds are enough for a court to strike down the rule:
One, media regulation doesn’t fall under the remit of the IT Act. News media organisations are not intermediaries, as they own complete responsibility for the content.
In a 1995 judgment in the case of ‘Cricket Association of Bengal versus Secretary, Ministry of Information and Broadcasting’, the Supreme Court ruled that pre-censorship goes against the liberty of the press, which is an essential element of the right to freedom of speech and expression. The 2021 rules empower a interdepartmental committee to take the final call on blocking of such content.
As of now, multiple media organisations have contested the new rules at respective state high courts. The government has appealed to the Supreme Court to club all such petitions together.Meanwhile, the government itself has started interpreting the rules differently. The govt has given a waiver to Apple—Apple’s messaging app won’t be considered as an intermediary.
Netflix wants to play the game
What do you do when you’re at the top of the streaming game and your rivals are still a distant second? Consider video games. Netflix is trying, by hiring a new executive to run its video games unit.
Netflix is the current leader of streaming media worldwide, namely because it’s the only service available in almost every country except China, North Korea, Crimea and Syria. But it does have competition coming up from rivals like Disney+ which could threaten Netflix’s crown in Southeast Asia, something we’ve written about.
Moving into games streaming services will put it in competition with the likes of Sony’s Playstation. Now, with other services requiring you to actually own the game to stream it into your PC, or TV to play, it’s not going to be that easy. Google’s already finding out through its Stadia service, slashing its revenue share in an attempt to attract developers. That comes after Google shuttered its internal development studios in February 2021.
Having experience in working out licensing issues and deals across regions and countries, Netflix could find some commonality in working out a deal with game developers.
But Netflix has one thing that most other services don’t—a ready pool of customers to cross-sell this new service to. Coupled with a spot on most smartphones and smart TVs, the captive technology to enable this is already in the customers’ hands.
All of this could help Netflix retain its king of streaming crown even as the mighty mouse (Disney+) looks to carve out its slice of the streaming kingdom.
Covid-19 had the healthcare dominoes falling. The diagnosis and treatment of non-communicable diseases like cancer and diabetes went down in India due to the pandemic-induced lockdowns. It’s estimated that the number of deaths caused due to communicable diseases other than Covid-19—like tuberculosis, HIV and malaria—have increased globally. As the pandemic caused disruptions to access to healthcare, patients everywhere suffered.
However, in a silver lining, a study conducted by Suburban Diagnostics over last year reported that the prevalence of dengue came down. The Mumbai-based diagnostics company analysed all dengue tests performed by them over six years, studying over 100,000 samples.
They found that the dengue positivity rate in 2020 was only 6% compared to 22% in 2019. Through 2020, the positivity rate touched a high of 15% in September when lockdowns were lifting. In the emailed press release last month, Suburban Diagnostics claimed that the result was because people covered less distance with lower frequency and that reduced the transmission of dengue in India.
Dengue is not the only disease that saw lower prevalence last year. A district in the state of Karnataka saw a steep decline in the number of malaria cases during the second wave of Covid-19.
Another welcome shift in stats has been the decline in road accidents. Road accident fatalities in India hit a 30-year low in Delhi in 2020. The data shared by Delhi Police reported 1,163 fatal accidents in the capital city, nearly 19% less than those reported in 2019.
Every dark cloud has a silver lining. Even the pandemic had one.
That’s all for today folks. We hope you are safe, happy and productive. We’ll be back tomorrow with more. Write in to tell us what you see as the biggest shifts in business, tech and beyond.