Snapping at TikTok

Good morning! Face Pay. It sounds like something Apple announced last night. But over the weekend, the Russian transport authority decided to start payment via facial recognition across 270 stations. Just for context, Moscow has the world’s largest video surveillance system, which has been used to enforce Covid-19 lockdowns and preventive arrests of dissenters.

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The Market Signal

Stocks: Indian benchmarks registered their seventh straight close in the green and, naturally, fresh all-time highs. The rally appears to be driven by the hopes of strong Q2 results as well as a surge in the prices of commodities such as metals. Among the sectoral indices, only Media and Pharma closed in the red, while PSU Bank (3.98%) and Metal (3.89%) were the biggest gainers.

The Teenage Social Dilemma

Even as they often obsess about each other, Instagram and TikTok might have someone else to think about. Snapchat. It is quietly winning over a demographic Facebook is aggressively courting, and TikTok dominates: teenagers.

Why? Less pressure (as compared to Instagram). It’s ephemeral, more intimate, less toxic, and mostly fun. Except, when it isn’t. That’s not the case with TikTok or Instagram, as we’ve learnt recently. That teenagers (or Gen Z, if you like) have taken to Snapchat consistently, shouldn’t come as a surprise at all.

The fine print: With over 500 million monthly active users, Snapchat has been growing, with one clear eye on TikTok, in terms of product, features, and spending big to acquire creators, even as it struggles to pay them. Its stock is ticking too. In Facebook's (or Instagram’s) case, this now presents an existential problem, particularly with growth plateauing across products. For TikTok, which recently announced its billionth active user, there’s much more than Snapchat to worry about.

Privacy Makes Money

Privacy is profitable. Facebook may not agree, but privacy champion Apple is the living example of it. The Cupertino-headquartered company’s advertising business has more than tripled in market share after it tinkered with its OS to increase privacy.

What did Apple change: Six months ago, software updates to iOS prevented advertisers from tracking browsing behaviour and targeting ads to consumers. This adversely impacted Facebook, Google, Snap, and others. Apple’s own ad business, Search Ads, has thrived ever since.

What are Search ads? The ads that you see in the App Store while searching for an app. Sponsored slots appear above the search results, and can easily steer you away from what you’re searching for to what an advertiser would like you to see for that search query. App advertising is big. Marketing spend on mobile apps in 2019 across Android and iOS was $58 billion. It is estimated to be $118 billion by next year.

Is Apple’s own advertising compliant with the policies it lays out for others? The company is evasive about this. Perhaps we’ll get the answer at an upcoming Senate or Congress hearing!

RSS Says OTT Regulation Not Enough

Indian television added a new annual fixture to its annual programming in 2014 — the founding day speech by the Rashtriya Swayamsevak Sangh (RSS) sarsanghachalak Mohan Bhagwat on Vijayadashami — after Narendra Modi led his Bharatiya Janata Party (BJP) to electoral victory and formed the government. It is now watched as keenly for government policy cues as the union budget.

The peeves: In his speech on October 15 this year, Bhagwat called on the government to regulate bitcoin, OTT platforms, and online education. Uncontrolled spread of Bitcoins could destabilize economies, platforms were showing content indiscriminately, and children were stuck to mobile phones as a rule, he said.

Bitcoin’s Big Day

A lot has happened for Bitcoin since its inception from an anonymous whitepaper in 2008. Especially over the past 18 months or so. It has repeatedly defied predictions of an impending crash to zero to register a lifetime high price of ~$64,000 a coin, around which it is now hovering again. It’s even legal tender now, in El Salvador, which you may not have heard of before the move.

But Bitcoin’s biggest day yet may finally be upon us. It’s about to become legal tender (in a manner of speaking) in a kingdom that matters much more: Wall Street. ProShares is set to launch the first Bitcoin ETF (exchange-tied fund) on the New York Stock Exchange after the SEC showed no interest in getting in its way. The ETF will be tied to Bitcoin price fluctuations (i.e. futures) rather than the asset itself.

It’s another giant leap towards legitimacy for crypto-kind, following the public listing of crypto exchange Coinbase.

Squid Game Won It For Netflix

Blockbuster hit Squid Game is worth $900 million for Netflix. Come to think of it, one super hit show is almost worth the entire investment ($1 billion) the company made into South Korean content. The company claims that its investment into South Korea has created an economic effect worth…$4.7 billion.

But beyond its growing popularity, Squid Game stands out for its relatively low production cost, pegged at $21.4 million, approximately $2.4 million an episode. Unsurprisingly, it is now Netflix’s most-watched original, with 132 million viewers and counting.

And now, there is a knock-on effect that South Korean entertainment stocks are seeing, thanks to, well, Squid Game. One such company, Studio Santa Claus Entertainment Co, surged by 30% on Sunday. And guess what? In China, a country where Netflix doesn’t stream, the series is a rage.

Over to You: While Squid Game is no longer top of the pile in the US, after being dethroned by You, it still remains in the top 10 list in almost 50 countries.

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What Else Made The Signal?

Capital injection: Ahead of its IPO, online pharmaceutical startup PharmEasy has raised $350 million from Amansa Capital, ApaH Capital, and Janus Henderson among others.

Virus alarm: A Surge in Covid-19 cases in the UK has raised concerns about whether the Delta Plus variant has become more transmissible and can evade immunity.

Hit a wall: Weighed down by the Evergrande debt crisis, energy crunch, and supply chain woes, China’s GDP grew at the slowest pace in a year, clocking 4.9% in the September quarter compared to 7.9% in the previous one.

Pay fine: The RBI imposed a penalty of ₹1 crore on State Bank of India for not reporting fraud properly.

Startups FTW: The Indian startup scene is heating up with 347 deals raising a total of $10.9 billion in the latest quarter ended September 2021.

Logging out: Microsoft is shutting down LinkedIn in China due to increased regulatory scrutiny.

An icon dies: Former US general and the first black secretary of state, Colin Powell, died of complications from Covid-19. He was 84.

FWIW

Up, up, up in the air: Remember the balloon-shouldn’t-touch-the-floor game you played as a kid? It’s now an international game with a trophy reward. Teams from 32 countries battled out their balloon balancing skills in the World’s first Balloon World Cup that took place this month in Tarragona, Spain. The wonders that TikTok challenges blossom into!

Superman’s changed vision: After 83 years of blowing the trumpet about “Truth, Justice and the American Way”, DC’s Superman has a revised motto that will appeal to a global audience. Clark Kent will now stand for “Truth, Justice and a Better Tomorrow”.

Siuuu-ngapore: Football superstar Cristiano Ronaldo has partnered with Singaporean billionaire investor Peter Lim’s son to promote ZujuGamePlay, a digital community built around football. Lim, who also owns Spanish football club Valencia CF, aims to make it a footballverse, much like the metaverses envisioned by Facebook, Epic Games, etc.

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