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Jio May Launch Android-Powered Low-Cost Phone in December: Report

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By Reuters | Updated: 9 September 2020

Reliance Industries’ telecom unit Jio is looking to outsource the manufacturing of over 10 crore low-cost smartphones that will be built on Google’s Android platform, Business Standard newspaper reported, citing sources.

The phones, which will be bundled with data packs, could be launched in December 2020 or early next year, the newspaper reported on Wednesday.

Reliance, India’s most highly-valued company, in July said Alphabet’s Google will invest $4.5 billion (roughly Rs. 33,102 crores) in its digital unit.

Billionaire Mukesh Ambani, who controls Reliance, in July said that Google would build an Android operating system (OS) to power a low-cost “4G or even 5G” smartphone that Reliance would design.

The new phone is set to pose a major challenge to Chinese vendors such as Xiaomi and BBK Electronics, owner of the Realme, Oppo, and Vivo brands that currently dominate a $2 billion (roughly Rs. 14,713 crores) market for sub-$100 (roughly Rs. 7,360) smartphones in India.

Powered by a clever mix of Bollywood, cricket-driven marketing and product features such as powerful cameras, the Chinese firms sell roughly eight of every 10 smartphones in the country.

Reliance executed a similar plan in 2017 with the launch of the Jio Phone, a no-frills device that gave users internet access for as little as $20 (roughly Rs. 1,470). Jio Phone now has more 100 million users, many of whom are internet first-timers.

Reliance’s ambition to hand a smartphone to every Indian could also win subscribers from telecoms rivals Vi (Vodafone Idea) and Bharti Airtel, who still have hundreds of millions of users with old-style feature phones on basic 2G networks.

Reliance has sold nearly 33 percent of its digital arm, Jio Platforms, to raise Rs. 152,000 crores and has won the backing of global financial and tech investors including, Facebook, Intel and Qualcomm.

© Thomson Reuters 2020

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Google Said to Be Set to Win EU Okay for Fitbit Deal With Fresh Concessions

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By Reuters | Updated: 29 September 2020

Alphabet’s Google is set to win EU antitrust approval for its $2.1 billion (roughly Rs. 15,489 crores) acquisition of fitness tracker maker Fitbit with its latest concessions to address EU antitrust concerns, people familiar with the matter said on Tuesday.

Google has offered to restrict the use of Fitbit data, reinforcing an earlier offer to the European Commission, the people said.

It has also offered to make it easier for rival makers of wearable devices to connect to Google’s Android platform by offering them access to the Android application programming interface (API), they said.

The Commission, which is scheduled to decide on the deal by December 23 and did not publish details of the concessions in line with its policy, declined to comment.

The EU competition enforcer will now seek feedback from rivals and customers before deciding whether to accept the concessions, demand more, or either clear or block the detail.

Last month, it rejected Google’s pledge not to use the fitness tracker’s data for advertising purposes in a bid to address competition concerns, saying that it was insufficient.

The Commission recently asked Google rivals and customers about interoperability issues, what technical steps Google could take to foreclose competition to Fitbit to increase its sales, and what could prompt it to do so, according to a person familiar with the matter.

It also asked about issues related to digital healthcare and the kind of data Google needs, and where the US company could acquire it, the person said, suggesting concessions may be needed in these two areas.

Healthcare providers, wearables rivals and privacy advocates have criticised the deal.

Fitbit has a 3 percent share of the global wearables market as of the first quarter of 2020, lagging behind Apple’s 29.3 percent share, as well as Xiaomi, Samsung and Huawei, data from market research firm International Data showed.

© Thomson Reuters 2020

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NTT Launches $40-Billion Buyout of Wireless Unit Docomo

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By Reuters | Updated: 29 September 2020

Japan’s Nippon Telegraph and Telephone said it will spend JPY 4.25 trillion (roughly Rs. 2,96,637 crores) to take its wireless carrier business private, in a deal that opens the path to lower prices as the government calls for cuts.

NTT will launch Japan’s largest-ever tender offer for the 34 percent of NTT Docomo stock that it does not own, the firm said in a statement. The telecoms firm will offer JPY 3,900 (roughly Rs. 2,700) per share, a premium of 40.5 percent to Monday’s closing price.

The buyout comes as new prime minister Yoshihide Suga calls on wireless carriers to reduce prices, with the government hoping resultant savings will stimulate consumer spending elsewhere in the economy.

On Tuesday, Chief Cabinet Secretary Katsunobu Kato reiterated that call, saying there needs to be “visible progress on lowering mobile phone charges”.

“NTT Docomo’s financial base will become stronger giving us the capacity to cut prices,” NTT Chief Executive Jun Sawada told a news conference.

NTT’s share price fell as much as 5.8 percent after the company said it was considering the buyout. The stock closed down 3 percent while NTT Docomo ended up 16 percent at its daily trade limit.

Mobile peers KDDI and SoftBank fell 4 percent, with SoftBank touching record lows.

That continued a slide among telcos which began when Shinzo Abe announced plans to step down as prime minister on August 28, as investors digested the prospect of Suga, who had previously called for price cuts, becoming premier.
Obliging

NTT spun off NTT Docomo in 1992 ahead of listing in 1998, as the government sought to stimulate competition in the telecoms sector. Buying it back would mark the end of a prominent parent-child listing that are frowned upon abroad yet common in Japan.

At $40 billion (roughly Rs. 2,94,954 crores), NTT’s tender offer is among the largest deals this year globally, Refinitiv data showed.

“Post acquisition, Docomo will no longer be answerable to shareholders. If the government instructs it to cut prices, it will oblige,” Jefferies analyst Atul Goyal wrote in a client note.

NTT, a former state monopoly, still counts the government as its largest shareholder with a 34 percent stake.

Government efforts to enhance competition have included backing Rakuten entry into the sector this year. The e-commerce firm’s low-cost plan model could suffer, however, should prices fall more broadly.

Meanwhile, government pricing pressure comes as carriers spend big to build fifth-generation services widely seen as critical to ensuring Japan’s competitiveness.

The buyout “is driven more by the potential to develop 5G and IoT services than regulatory pressure,” said analyst Kirk Boodry at Redex Research, referring to the Internet of Things. The industry is seeking “new, less regulated revenue streams,” he said.

The telecoms firm said it will fund the acquisition through loans totalling JPY 4.3 trillion (roughly Rs. 3,00,127 crores) from Japan’s biggest three banks and others, with Mitsubishi UFJ Financial Group the largest lender.

NTT’s approach contrasts with that of SoftBank, which is selling down its stake in its wireless unit, forgoing stable dividend income in favour of a cash injection as it focuses on investing.

© Thomson Reuters 2020

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Elon Musk Plans IPO for SpaceX’s Starlink Business

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By Reuters | Updated: 29 September 2020

Tesla Chief Executive Officer Elon Musk plans to list SpaceX’s space internet venture, Starlink, several years in the future when revenue growth is smooth and predictable.

“Public market does not like erratic cash flow haha,” the billionaire entrepreneur tweeted on Monday.

Musk said last year that Starlink was an important new revenue stream for his California-based Space Exploration Technologies, or SpaceX.

SpaceX President Gwynne Shotwell in February floated the idea of spinning Starlink off for an IPO in the coming years.

SpaceX is racing to build out its Starlink satellite constellation to offer broadband internet commercially by the end of 2020.

Musk, in his tweet, also said he is a “huge fan” of small retail investors and will ensure they get top priority.

© Thomson Reuters 2020

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Google to Enforce Play Store Tax on the 3 Percent of Apps Not Paying

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By Reuters | Updated: 29 September 2020

Alphabet’s Google on Monday sought to rebut criticism that it selectively enforces its 30 percent mobile app store tax, demanding that the over 3 percent apps selling digital items without complying follow the rules within a year.

The change follows lawsuits by Fortnite video game maker Epic Games last month accusing Google and Apple of anticompetitive conduct. Apps sold on the tech leaders’ stores are required to use their payment systems so they can collect a portion of sales, which developers describe as a tax. The companies are defending the allegations.

App stores are a fast-growing business as sales of Google’s search ads and Apple’s iPhone flatten out.

Google said under 3 percent of developers with apps on its Play store sold digital goods over the last 12 months, and nearly 97 percent comply with its payment system policy.

Dating apps maker Match is among the companies that have publicly said they do not pay Google’s 30 percent fee, which decreases to 15 percent in subsequent years if it is for a subscription service.

Antitrust regulators in several countries are looking at the issue, including in South Korea, where several media apps anticipating Google’s stricter enforcement preemptively complained to government officials recently.

Apps have said 30 percent is excessive compared with the 2 percent fees of typical credit card payments processors, while Apple and Google say the amount covers the security and marketing benefits their app stores provide.

New apps must use Google’s payments tool for sales by January 20, while existing apps have until September 30, 2021.

Apps that shifted to selling digital items from physical goods and services because of the coronavirus pandemic may get additional time to comply, Google said. Apple said last week that a similar temporary reprieve extends through December 31.

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Amazon Prime Day Global Mega-Sale to Be Held on October 13-14

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By Agence France-Presse | Updated: 29 September 2020

Amazon on Monday announced the new date for its annual global mega-sale, which it said aims to promote small and medium-sized businesses despite accusations by numerous lawmakers and trade associations that the retail giant is trying to crush competition.

“Prime Day,” named for the Amazon subscription service that offers users free delivery and other perks, will be held on October 13-14, the company said.

Launched in 2015, the wildly popular sale is normally held in July but had to be pushed back this year because of the coronavirus pandemic.

Because of lockdowns, Amazon has faced a huge surge in demand for online shopping and delivery of household goods, forcing its warehouses and supply teams into overdrive.

In its statement, the group said it would spend more than $100 million (roughly Rs. 737 crores) in new promotions to benefit small and medium-sized businesses and help them win new clients.

The company has played a crucial role during lockdowns around the world, enabling people to stay at home by providing them with food deliveries, cloud services and entertainment on their screens.

In the second quarter, Amazon pulled in $5.2 billion (roughly Rs. 38,350 crores) in net profit, double the previous year, and in spite of the $4 billion (roughly Rs. 29,500 crores) it invested in managing the crisis.

“During the COVID-19 crisis, we hired an additional 175,000 employees, including many laid off from other jobs during the economic shutdown,” Amazon chief Jeff Bezos said in July.

“Third-party sales now account for approximately 60 percent of physical product sales on Amazon, and those sales are growing faster than Amazon’s own retail sales,” he said.

“Selling in Amazon’s stores has enabled hundreds of thousands of smaller companies to sustain and even grow their sales despite the COVID-19 crisis,” Amazon said in a statement.

Amazon’s dominance has been questioned by some lawmakers.

During a hearing in July on big tech companies including Amazon, Democratic congressman David Cicilline argued that Amazon’s dual role as both platform operator and a seller on the very same platform was essentially anti-competitive.

“These companies as they exist today have monopoly power,” Cicilline said.

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Uber Gets Back London License After Winning Court Challenge

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By Associated Press | Updated: 28 September 2020

Uber can keep operating in London after the ride-hailing company won a court appeal on Monday against the refusal by transit regulators to renew its license.

The US company had challenged Transport for London’s (TFL) decision in late 2019 not to renew its private hire vehicle (PHV) operating license over safety concerns involving imposter drivers.

“Despite their historical faillings, I find them, now, to be a fit and proper person to hold a London PHV operator’s license,” Deputy Chief Magistrate Tanweer Ikram wrote in his decision.

However, he said he wanted to hear from lawyers for both sides before deciding how long Uber’s license should be and under what conditions it should operate.

Uber was allowed to continue operating while the appeal was underway. The decision came after a four-day hearing at Westminster Magistrates’ Court earlier this month.

Transport for London had decided in 2019 to reject Uber’s application for a new license, citing several breaches that placed passengers at risk. The regulator noted, among other things, that unauthorised drivers were able to carry out thousands of rides by uploading their photos to other driver accounts.

The magistrate said he took into account Uber’s efforts to improve oversight and didn’t find any evidence of a “cover up” of the driver photo fraud problem.

TFL had already revoked Uber’s license once before, in 2017, but a court later granted it a license lasting 15 months, which TFL then extended for two more months in late 2019, but with 20 added conditions.

The legal victory in a lucrative European market will help Uber as it struggles to turn a profit. The company posted a $1.8 billion (roughly Rs. 13,264 crores) loss in the latest quarter, raising doubts that it can meet its goal of becoming profitable by 2021.

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