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Indian Loan Apps on Google Play Store Charging High Interest on Short-Term Loans in Policy Violation

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By Reuters | Updated: 11 January 2021

At least 10 Indian lending apps on Google’s Play Store, which have been downloaded millions of times, breached Google rules on loan repayment lengths aimed at protecting vulnerable borrowers, according to a Reuters review of such services and more than a dozen users.

Four apps were taken down from the Play Store – where the vast majority of Indians download phone apps – after Reuters flagged to Google that they were violating its ban on offering personal loans requiring full repayment in 60 days or less.

Three of these apps – 10MinuteLoan, Ex-Money, and Extra Mudra – didn’t return calls and emails seeking comment.

The fourth app, StuCred, was allowed back on the Google Play store on January 7 after it removed the offer of a 30-day loan. It denied engaging in any unscrupulous practices.

At least six other apps remain available at the store that offer loan repayment lengths, or tenures, some as low as seven days, according to 15 borrowers and screenshots of loan details from all six apps shared with Reuters.

Some of these apps apply steep processing fees, as high as Rs. 2,000 on loans of less than Rs. 10,000 with tenures of 30 days or under, according to the 15 borrowers. Together with other charges including one-off registration costs, borrowers can pay, in real terms, interest rates as high as 60 percent per week, their loan details show.

By comparison, Indian banks typically offer personal loans with annual interest rates of 10-20 percent, and they usually do not have to be repaid in full for at least a year.

The Reserve Bank of India (RBI), the banking regulator, did not respond to a request for comment about whether it planned to step up supervisory action. In December it issued a public notice about lending apps, warning some engaged in “unscrupulous activities”, such as charging excessive interest rates and fees.

Google, which dominates India’s app market with over 98 percent of smartphones using its Android platform, said its policies were “continuously updated in response to new and emerging threats and bad actors”.

“We take action on apps that are flagged to us by users and regulatory bodies,” it added.

When contacted by Reuters, the apps offering short tenures either denied wrongdoing or did not respond.

The apps, many of which act as intermediaries connecting borrowers and lending institutions, are not breaking the law as the RBI has no rules covering minimum loan tenures. The RBI also does not oversee intermediaries.

The Indian finance ministry and information technology ministry did not respond to requests for comments on whether they planned to increase scrutiny of these apps.

Some consumer campaigners say short-term, or payday, loans can lead to borrowers defaulting and running up spiralling costs.

“Predatory loan apps with high processing fees, short tenures and steep penalty charges on default are leading people into a debt trap,” said Pravin Kalaiselvan, who heads a digital rights group, Save Them India Foundation.

Google introduced its own global policy for its platform in 2019 “to protect users from harmful or deceitful practices”.

The rise of smartphones and affordable mobile Internet in India has seen a proliferation of hundreds of personal lending apps in recent years. Campaign groups say rapid advances in technology have outpaced authorities and are calling for regulations to be introduced regarding loan tenures and fees.

“There are no clear norms on lending apps in India. Right now they fall in a grey zone,” said Nikhil Pahwa, a digital rights activist and editor of MediaNama, a Delhi-based publication on technology policy.

‘Unilaterally decided’

The four apps found to have breached Google’s repayment length policy – 10MinuteLoan, Ex-Money, StuCred, and Extra Mudra – were advertising loan tenures of 30 days on their apps and had been downloaded a total of at least 1.5 million times.

Reuters flagged those apps to Google on December 18 and they were taken down from the Play Store in India within four days.

In response to a Reuters query about whether it had offered loans that required full repayment in 60 days or less, StuCred said: “Google has unilaterally decided that fintech apps cannot be on their apps store which have repayments under 30 days, even though no law relating to the same has been passed that would require such action on their (Google’s) part.”

Several other apps say on their Play Store listings that the minimum repayment length they offer is over three months, but in reality their tenures often range between seven and 15 days, according to the 15 borrowers and their screenshots.

Those apps include CashBean, Moneed, iCredit, CashKey, RupeeFly, and RupeePlus, which have been downloaded a total of nearly 12 million times.

Moneed said it adhered to RBI rules and that any company that did not do so should not be allowed to do business. In response to a Reuters query about whether it had offered loans that required full repayment in 60 days or less, it said: “We support 90 days repayment for the loan cycle.”

CashBean also said it followed RBI guidelines. “Our customer-care lines are open for all our borrowers at all times,” it added. It did not directly address a question on whether it offered loan tenures of 60 days or less.

CashKey, iCredit, RupeeFly and RupeePlus did not respond to emails seeking comment and were not reachable by phone.

Harassment investigations

The lending app industry has separately attracted the scrutiny of police who say they are investigating dozens of apps following the suicides of at least two borrowers in the past month after they and their families were allegedly harassed by debt-recovery agents.

The police haven’t disclosed the identities of the those under investigation.

Debt-recovery harassment is prohibited under RBI rules which say collection agents cannot harass borrowers by “persistently bothering” them, or by contacting their family or acquaintances.

The Reuters review of 50 popular lending apps available on Google Play found that nearly all of them require borrowers to give them permission to access their phone contacts.

Mahesh Dommati, a 28-year-old tech worker in Hyderabad who lost his job during the COVID-19 lockdown, was unable to repay the Rs. 6,000 loan he had taken out from an app called Slice. He said recovery agents used his contact list to repeatedly call his family and friends, demanding they pay on his behalf.

Slice said it abided by RBI rules and did not engage in harassment.

© Thomson Reuters 2020

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Apple vs Epic: Fortnite Maker Opposes Apple’s Effort to Pause Antitrust Trial Orders

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By Reuters | Updated: 23 October 2021

Fortnite creator Epic Games on Friday opposed Apple’s efforts to put on hold orders handed down in an antitrust trial as a potentially lengthy appeals process plays out.

US district Judge Yvonne Gonzalez Rogers in September struck down some of the iPhone maker’s App Store rules, including a prohibition on developers directing their users to other payment options beside Apple’s in-app payment system, in a partial win for Epic and other app makers.

Apple has until December 9 to comply with the injunction, but earlier this month the company said it will appeal the ruling and asked Gonzalez Rogers to put her order on hold as the appeals process, which could take more than a year, unfolds.

Epic on Friday argued in a court filing that Apple has not met the legal standard for that pause, which requires Apple show that it will be irreparably harmed by even temporarily complying with the order if the injunction is later reversed on appeal.

Epic said that Apple’s positive comments about the ruling shortly after it landed, and its delay in asking for a pause, showed that it would not be harmed by enacting the orders.

“The public interest favours denying (Apple’s request); an injunction is the only path to effective relief,” Epic wrote. “History shows … that in the absence of an injunction, Apple will not make any changes.”

Apple did not immediately respond to a request for comment.

A hearing on Apple’s request is set for November 9.

© Thomson Reuters 2021

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Apple Updates App Store Payment Rules to Allow Developers Contact Customers Directly

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By Agence France-Presse | Updated: 23 October 2021

Apple has updated its App Store rules to allow developers to contact users directly about payments, a concession in a legal settlement with companies challenging its tightly controlled marketplace.

According to the App Store rules updated Friday, developers can now contact consumers directly about alternative payment methods, bypassing Apple’s commission of 15 or 30 percent.

They will be able to ask users for basic information, such as names and e-mail addresses, “as long as this request remains optional”, said the iPhone maker.

Apple proposed the changes in August in a legal settlement with small app developers.

But the concession is unlikely to satisfy firms like Fortnite developer Epic Games, with which the tech giant has been grappling in a drawn-out dispute over its payments policy.

Epic launched a case aiming to break Apple’s grip on the App Store, accusing the iPhone maker of operating a monopoly in its shop for digital goods or services.

In September, a judge ordered Apple to loosen control of its App Store payment options, but said Epic had failed to prove that antitrust violations had taken place.

For Epic and others, the ability to redirect users to an out-of-app payment method is not enough: it wants players to be able to pay directly without leaving the game.

Both sides have appealed.

Apple is also facing investigations from US and European authorities that accuse it of abusing its dominant position.

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Tencent Says ‘Loophole’ Allowed WeChat Searches on Google, Bing

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By Reuters | Updated: 22 October 2021

Tencent’s WeChat has fixed a glitch that allowed some of its content to be searchable by external search engines, the owner of China’s most popular messaging app said on Friday, raising questions over regulators’ latest attempt to crackdown on the internet sector.

Some of WeChat’s content, including articles on its public accounts page, was briefly searchable in the last few days on Alphabet-owned Google and Microsoft’s Bing, but not on China’s dominant search engine Baidu, Reuters checks showed.

The change had prompted speculation that Tencent was heeding a call by Chinese authorities for its tech giants to tear down “walled gardens” in the country’s cyberspace which has come amid a wide ranging crackdown on the sector.

“Due to recent technological upgrades, the official accounts’ robots protocol had loopholes, which caused the external crawlers to scrape part of the official accounts’ content,” Tencent said in a statement in Chinese.

“The loopholes have since been fixed.”

Google, Microsoft, and Baidu did not immediately respond to a request for comment. Google is not available in China.

The ability to find WeChat content on Google and Bing was initially raised by users on developer forums. China’s internet sector has been long dominated by a handful of technology giants who have historically blocked rivals’ links as well as their search crawlers, a practice is often referred to as ‘walled gardens’.

In recent months, this practice has been targeted by Chinese authorities as part of a sweeping regulatory crackdown.

Last month, China’s Ministry of Industry and Information Technology (MIIT) ordered companies to stop blocking links, which they said has affected users’ experience and damaged consumer rights.

The MIIT has also been studying plans and conducting research to make WeChat content available on external search engines, according to a person with direct knowledge.

MIIT did not immediately respond to requests for comment.

Some users on China’s Twitter-like Weibo platform expressed dismay over Tencent’s comments.

“This should be an important attempt of creating an open internet space, how can you call it a bug,” said one user.

© Thomson Reuters 2021

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Snap Shares Plunge 25 percent as Apple Privacy Changes Hit Advertising Business

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By Reuters | Updated: 22 October 2021

Shares of Snap plummeted 25 percent on Thursday after the owner of photo messaging app Snapchat said privacy changes implemented by Apple Inc on iOS devices hurt the company’s ability to target and measure its digital advertising.

The Santa Monica, California-based company, which earns the vast majority of its revenue from selling digital advertising on the app, said the issue was compounded by global supply chain disruptions and labor shortages and caused brands to pull back on their advertising spending.

The results for Snap, which is the first of the major social media companies to report earnings, cast a shadow over Facebook and Twitter, which release third quarter results next week..

Snap’s results also knocked Facebook shares down 6 percent, Twitter down 7 percent and Alphabet fell 3 percent on Thursday.

The Apple privacy updates were rolled out broadly in June and prevent digital advertisers from tracking iPhone users without their consent.

A new ad measurement tool provided by Apple hampered the ability for companies to measure the performance of their ads, upending many of the ways advertisers have been accustomed to doing business for decades, said Snap Chief Executive Evan Spiegel during a conference call with analysts.

“This has definitely been a frustrating setback for us,” he said.

Snap added it expects the Apple privacy changes and global supply chain disruptions to linger through the fourth quarter, which is typically the highest-earning period for social media companies when brands ramp up marketing for the holiday season.

Many of the advertisers who place ads on Snapchat are in the beauty, fashion and consumer goods industries.

Snap said the supply chain disruptions affected a wide variety of advertisers across industries and regions.

Revenue for the third quarter ended September 30 was $1.07 billion, missing consensus estimates of $1.1 billion (roughly Rs. 8,000 crore), according to IBES data from Refinitiv.

Daily active users, a metric watched closely by advertisers and investors, rose 23 percent year-over-year to 306 million, beating analyst estimates of 301.9 million.

Snapchat has worked to attract and retain users by building new features like the ability to discover restaurants and stores through a map feature, or play virtual games with friends.

The net loss during the quarter was $72 million (roughly Rs. 540 crore), or 5 cents (roughly Rs. 4) per share, narrowing from $199.9 million (roughly Rs. 1,495 crore), or 14 cents (roughly Rs. 10) per share, in the year-ago quarter.

Snap forecast fourth quarter revenue between $1.16 billion (roughly Rs. 8,670 crore) to $1.2 billion (roughly Rs. 8,970 crore), and daily active users between 316 million to 318 million.

© Thomson Reuters 2021

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PayPal Said to Be in $45-Billion Bid for Pinterest

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By Reuters | Updated: 22 October 2021

PayPal has offered to buy Pinterest for $45 billion (roughly Rs. 3,36,770 crore), people familiar with the matter said, a combination that could herald more financial technology and social media tie-ups in e-ecommerce.

It would be the biggest acquisition of a social media company, surpassing Microsoft’s $26.2 billion (roughly Rs. 1,95,990 crore) purchase of LinkedIn in 2016.

The deal talks come as internet shoppers increasingly buy items they see on social media, often following “influencers” on platforms such as Instagram and TikTok. Acquiring Pinterest would allow PayPal to capture more of that e-commerce growth and diversify its income though advertising revenue.

PayPal has offered $70 (roughly Rs. 5,200) per share, mostly in stock, for Pinterest, one of the sources said. The online payments provider hopes to successfully negotiate and announce a deal by the time it reports quarterly earnings on November 8, the source added.

The sources cautioned that no deal was certain and terms could change. They asked not to be identified because the matter is confidential.

PayPal and Pinterest did not respond to requests for comment. Bloomberg News first reported on the companies’ talks on Wednesday.

PayPal shares fell 4.9 percent to close at $258.36 (roughly Rs. 19,330), while Pinterest shares jumped 12.8 percent to $62.68 (roughly Rs. 4,690).

“(The) combination would be a significant positive for PayPal’s ongoing monetisation initiatives on both sides of its merchant and consumer platforms, especially if Pinterest’s social commerce platform gets integrated with Honey’s AI into PayPal’s destination app,” Wedbush analysts wrote in a note.

The payments behemoth was among the big winners of the COVID-19 pandemic, as more people used its services to shop online and pay bills to avoid stepping out. Its shares have risen about 36 percent in the last 12 months, giving it a market capitalisation of nearly $320 billion (roughly Rs. 23,94,100 crore).

Pinterest was valued at about $13 billion (roughly Rs. 97,275 crore) when it went public in 2019. It also saw a huge spike in users looking for crafts and DIY project ideas, as lockdown curbs kept people at home.

As lockdowns eased, Pinterest has warned about slowing user growth, especially in the United States, its largest market. It has said it expects revenue growth mainly through deeper engagement with existing users rather than signing up new ones.

The market has valued Pinterest shares more cheaply than those of some younger social media platforms such as Snap but higher than more mature companies such as Twitter, according to Refinitiv Eikon valuation metrics.

PayPal’s offer represents a 26 percent premium to Pinterest’s closing price of $55.58 (roughly Rs. 4,160) on Tuesday and it is equivalent to 62 times the social media company’s earnings before interest, taxes, depreciation and amortisation over the last 12 months, according to Eikon.

By that metric, Microsoft paid 79 times LinkedIn’s earnings when it acquired it in all-cash deal. Pinterest, however, would be giving its shareholders some of PayPal’s stock, in a bet that this currency would appreciate over time over time as the combined company reaps revenue and cost synergies.

Pinterest is at a crossroads after co-founder Evan Sharp announced last week he would step down as chief creative officer to join LoveFrom, a firm led by Jony Ive, the designer of many Apple products.

Sharp founded the online scrapbook and photo-sharing platform in 2010 with Ben Silbermann, who is the San Francisco, California-based company’s chief executive officer, and Paul Sciarra, who left in 2012.

PayPal had been looking to boost its e-commerce offerings in recent years through acquisitions. It bought online coupon finder Honey Science in 2019 for $4 billion (roughly Rs. 29,920 crore) and Japanese buy-now-pay-later (BNPL) firm Paidy for $2.7 billion (20,195 crore) earlier this year. It acquired return-service provider Happy Returns in May.

Social media-driven commerce

Social media platforms that have not pursued mergers with fintech firms have been working on ways to allow consumers to buy directly from their platforms.

TikTok, for example, is testing a way for users to buy products directly on its short video app. It has partnered with ecommerce giant Shopify and in August began allowing retail brands to link their product catalogs to the app.

Analysts said the PayPal-Pinterest deal talks highlight the potential for other social media and fintech companies to join forces to capture swaths of the e-commerce market.

“Social/interactive commerce is growing in the United States and no one has won it yet. So rather than going against Amazon, PayPal is making a bet on a different kind of shopping model,” said Marketplace Pulse e-commerce analyst Joe Kaziukėnas.

© Thomson Reuters 2021

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WeChat Makes Content Searchable on Google and Bing

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By Reuters | Updated: 22 October 2021

Tencent’s WeChat has made its content searchable on some foreign search engines such as Alphabet-owned Google and Microsoft’s Bing, Reuters checks showed, in the latest tearing down of “walled gardens” in China’s internet sector.

Content from China’s most popular messaging app WeChat, including articles and videos on its popular public accounts page, a function similar to a news portal, has opened to external search engines, other than Tencent’s own Sogou search engine, in recent days.

Tencent, Google, and Microsoft did not immediately respond to a request for comment. Google is not available in China.

China’s Internet sector has been long dominated by a handful of technology giants who have historically blocked each others rivals’ links as well as their search crawlers. The practice is often referred to as ‘walled gardens’.

In recent months, this practice has been targeted by Chinese authorities as part of a sweeping regulatory crackdown.

Last month, China’s Ministry of Industry and Information Technology (MIIT) ordered companies to stop blocking links, which they said has affected users’ experience and damaged consumer rights.

The MIIT has been studying plans and conducting research to make WeChat content available on external search engines, according to a person with direct knowledge.

MIIT and Tencent did not immediately respond to requests for comment.

WeChat content however, is not yet searchable on Baidu, China’s dominant search engine, according to Reuters checks. Baidu didn’t immediately respond to a request for comment.

Citi analysts said in a Tuesday note that the potential “opening up of the social ecosystem to search engine” was a positive development for Baidu, as its “leading search gateway position has been weakened and diluted by the growth and dominance of super apps.”

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