Advertising backlash 🙄
Retail apocalypse, autonomy deal, and Europe is open.
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Retail apocalypse claims another victim ❌
The global retail apocalypse initiated by ecommerce and worsened by the pandemic has taken another casualty as Microsoft on Friday said that it is permanently closing nearly all of its physical stores globally.
The company says that its increasing focus on its quite successful enterprise business segments, and that with most sales shifting online, it doesn’t make sense to own and operate retail stores. The closure will cost the company a $450M one-time charge.
The company has 83 stores worldwide including 72 in the US and many others abroad. All retail employees will be given a chance to stay with the company in different roles.
AMZN enters the autonomous arena 🙌
Amazon will be acquiring autonomous startup Zoox, in an attempt to ramp up autonomous ride hailing abilities and potentially compete against rivals like Google’s Waymo.
The terms are not disclosed yet but credible reports suggest a price tag of $1.2 Billion on the deal. Zoox CEO, Aicha Evans, said that this deal will solidify the startups impact on the autonomous driving industry. Also, given the capital intensive nature of autonomous research, the deal wins Zoox much needed support and resources of a deep pocketed company like Amazon.
Experts and analysts believe however that considering the limitations of autonomous driving to work safely on everyday roads, Amazon is looking at deploying the technology to streamline logistics and operations within its operations centers.
Zoox had raised more than $750 Million and had around 1000 employees.
The unskilled workforce reshuffle 😟
While the pandemic brought death and destruction everywhere else, India witnessed a unique repercussion on top of it all - mass migration of the nation’s hardest working, undergone in some of the harshest conditions imaginable.
Analysts estimates put the migrant exodus from India’s megacities to its hinterlands at over 10 Million. Many are indicating no interest in ever coming back. Little monetary incentive, increasingly unsafe city conditions due to COVID, and much kinder living conditions in India’s villages seem much more appealing.
Digitization is enabling the exodus too. The remotest parts of the nation are much well connected to the global stage now than ever before, thanks to smartphones and free data. This further alleviates the impression that remote villages are backward.
The economic consequences of this are limitless. Domestic payments startups claim that domestic remittances dropped nearly 90% at the beginning of the lockdown as paychecks dried up. Rents in cities will go down.
Real estate is already losing its mojo. The urban dream and consumer spending built around it could be challenged. There are political consequences as well as returning sons are now active voters. Recognizing the shift, heartland states like UP, Bihar, MP, Odisha have come up with many programs including elaborate stimulus packages, industrialization schemes, employment schemes etc.
Regardless, urban industries and infrastructure are suffering the most as a result of the exodus and the long term political, economic and social consequences of the shift have barely begun to manifest yet.
Some believe the return to villages is actually a good sign, with unprecedented knowledge sharing between the urban and the rural, increased voting and perhaps activism, as well as may be a push for more education. In all cases, the future is nothing like India has seen before.
Big tech is again in hot water 🧐
Big technology companies are increasingly beginning to run into walls with regulators. After FB and GOOGL being held to task several times over antitrust practices, the government has now turned its attention to AAPL.
The smartphone company forces app makers and developers to use its payment system “Apple Pay” to accept payments from consumers on the smartphone. Then it charges 30% of the transaction as its fee. Developers and apps have called his practice extremely predatory and would ask users to pay on the website instead of the app for subscriptions. This is a routine practice adopted by Netflix, Spotify and even Amazon.
But a startup (“Hey”) in Silicon Valley tried to do it and Apple went bananas. They took down the app and roasted the company in a public rebuttal. The startup fought back and they’re working a truce. But meanwhile the government smelled the rift and is now looking for evidence.
Reportedly, the government is talking to developers and other app makers to get a clear idea of Apple’s practices. While course of action is yet to be know, the worst case scenario can be really detrimental for Apple’s business with the government even forcing them to spin-off the App Store as an independent company.
Digital advertising backlash 🖥️
Following the racism related protests, renowned civil rights groups called on various brands to stop spending on Facebook advertising to protest against the company’s policies on hate and misinformation.
The ad boycott quickly gained momentum with big name spenders joining the list of critics. Consumer company Unilever will pause advertising on Facebook, Instagram and Twitter throughout 2020.
Unilever’s call was quickly echoed by Coca Cola making a similar commitment, quickly followed by Patagonia, The North Face joined with Verizon jumping on the bandwagon.
The global digital advertising industry was winning as demand was quickly shifting online. It remains to be seen how bad the impact of these boycotts is on revenue and profits for the social platforms, but investors most certainly seem concerned as stock prices for GOOGL and FB ended the week in the red.
The global digital advertising industry is a $335 Billion dollar market, growing 15% each year. But the backlash coupled with the pandemic induced pullback in demand, analysts believe this could mean a 2-10% decline in the industry this year.
Tweet of the day -
Some Monday motivation to get the ball rolling. Have a great week folks!
What else are we snackin’ 🍿
📱 AMZN pay launches smart store - Amazon is making moves into the payments space in India as the company will now allow you to pay at more than 4 Million stores across the country by scanning QR codes through Amazon Pay. The technology is built on UPI infrastructure, and will quickly be followed by digital catalogues and online orders for local stores.
✈️ As lockdown restrictions ease, international flights to China resume - global airlines are reopening their flight routes to China as lockdowns worldwide are easing. Germany and the US are among the first countries to be willing to restart routes.
😷 Record spike in daily cases as recoveries cross 3 lakhs- with ramped up testing, India’s COVID-19 tally is on the rise as well. Good news is that recoveries remain consistently high.
👎 IMF cuts global growth forecasts - in the IMF’s latest update to the World Economic Outlook, the organization lowered its growth projections to 3.3% for the year and provided bearish commentary on the impact of the pandemic. IMF chief expressed her continued pessimism given the uncertainty about the pandemic ending and advised that not all is clear yet despite lockdowns easing and economies bracing for a revival.
🧳 Europe travel is back - Europe will now be officially open to travel starting July 1st for about 54 countries. Surprisingly, the US is excluded from the list but India is on the list and that may be great news for those looking to get some travel done through the rest of the year!
Hope you took a thing or two away from today’s edition. 😀
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