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Market summary: 📊
Bloodbath ensued in the Indian markets on Monday with both indices losing over 2% in a single session. US markets followed into murky waters as a second-wave scare turned investors away. Remote-friendly stocks however fared really well.
US:
S&P 500 - down 1.16%
Nasdaq 100 - up 0.40%
India:
Nifty 50 - down 2.21%
Sensex - down 2.09%
Satya’s magic… 😎
With the TikTok deal not working out, Microsoft went ahead and plonked the chunk of cash it had freed up to acquire a gaming company, Bethesda Softworks, for a whopping $7.5 billion. Wall Street and the tech world was caught off guard.
What’s driving the deal: Bethesda develops and publishes a flurry of popular games for Xbox, PS4 and other setups — including The Elder Scrolls, Fallout, Wolfenstein etc. and with the deal, Microsoft is basically beefing up its self-owned game portfolio on its Xbox ecosystem.
A dense portfolio of in-house games could make Microsoft’s Xbox ecosystem and xCloud (Microsoft’s cloud gaming service) really attractive. (Quick reminder — cloud gaming is the next frontier of gaming tech, wherein users are able to stream and play games on your TV just how you stream YouTube or Netflix or HotStar). The deal increases the appeal of the Xbox ecosystem to gamers, kinda how a deep slate of original content is slowly turning into Netflix’s advantage. Verge has solid coverage on the subject. Read here.
Lastly, it's interesting to note that this is Satya’s 6th acquisition of over a billion dollars since he took charge of MSFT. The courage, excitement, and fervour with which Microsoft is chasing opportunities even at this stage is truly mind blowing.
Amazonifying gormint 🛒
Government of India’s own version of an ecommerce marketplace has helped save the country over a billion dollars to date apparently.
Backstory: about 4 odd years ago, GOI adopted an e-Marketplace (also called GeM) to help streamline the $400 billion worth annual government procurement across the nation. A network between ministries and state companies to connect millions of sellers including biggies like Tata, HUL, etc. was built, moving a sizable portion (about $3.5 billion) to online buying.
GeM officials claim there is considerably more room to save money, now that the test run is done successfully, by cutting efficiencies, adding transparency and avoiding wastage. Particularly now when the administration is scrambling to fix budget deficits, the move is a life saver. GeM is aiming to digitize $100 billion gross volume in the next 3-5 years.
Apparently, until 2016 most procurement was done through a system that was originated by the British back in 1860… surprise surprise…. The PMO had proposed the marketplace after studying the US and Korean governments’ moves. So far looks great! Read more.
Second innings 🙌
The ex-CEO of Cognizant, Indian American Francisco D'Souza, will start a private equity firm of about a billion dollars in size, with a simple focus—invest in niche tech, software and services with deep domain expertise, including M&A when necessary. Fundraising is underway and so far interest from big name funds has been stellar.
D’Souza is a magician. The flamboyant CEO took charge of Cognizant when the company was a $1 billion entity and left the company a $16 billion powerhouse, disrupting the entire IT consulting space with low-cost high-quality services, and making seasoned competitors like Infosys and Wipro sweat their pants. He had quit Cognizant in 2018 to take personal time and now is back in the ring.
What to expect: the rise of subscription software businesses have lured private equity firms like a moth to the flame. Billionaire Robert Smith of the famed PE firm Vista Equity Partners said “Software contracts are better than first-lien debt” — implying you pay your software bills before you make loan payments, indicating the resilience of these business models.
D’Souza’s entry here in that case is not surprising. Minus the noise of public market shareholders, buying software firms and turning them into behemoths, is the best use of all expertise and talent of patient and seasoned leaders like him. And given his experience in driving value for shareholders last time, you can expect a blowout performance in this innings too. Read more.
Revival possible? 🤔
With Zoom and TikTok, both running on Oracle's cloud infrastructure, investor sentiment around Oracle is quickly changing. Wall Street is trying to foretell the company’s comeback and so far the outlook has only been positive.
Upgrades for Oracle’s stock were quick to follow on Wall Street yesterday. One analyst even called the TikTok deal a “shot in the arm”. So far, Oracle's cloud business was lagging the market leaders by an arm and a leg and while this shot may not help Oracle bridge that gap, it sure could deliver critical fuel for their sales and marketing teams. For example, last year Oracle’s revenue dropped 1.1% while AWS, Microsoft Azure, Google Cloud — all grew over 40%.
What makes the cloud-dominance race so attractive is that despite the market leading positions of AWS, Microsoft Azure, and Google Cloud, the global IT spending is just a HUGE TAM ($4 trillion+) and the opportunity to offer services in and around is large. Which means if Oracle does manage to make a comeback even this late in the market, it could carve out a nice meal for itself. Read more.
Who got the cash, bruh? 💰
Fantasy gaming platform Mobile Premier League (MPL) has raised a gigantic $90 million Series C from big names including SIG Global, RTP Global , MDI Ventures and Pegasus Tech Ventures etc. with existing investors Sequoia India and others pitching in. Twitter went gaga.
In the backdrop of the ongoing IPL, fantasy gaming platforms are flush with engagement. However, MPL goes a notch further, operating a publishing platform for other game developers to build and share their games. The company boasts 60 million users and has garnered a staggering $350-million valuation in under 2 years since its founding.
International expansion as well as adjacent services including live streaming, and audio and video content features, are on the table. Bravo boys!
Next up, limping along in the horse-race is BSNL,
The state-run telco corporation has scooped up ₹8,500 crore via its first bond sale in the local market, in a bid that was apparently oversubscribed by as much as ₹17,183 crore. ICICI Lombard, Punjab & National Bank, Postal Life Insurance, and SBI life insurance all took part in the sale which saw close to 229 bids. Well, it gets easier to raise cash with the support of the bottomless pockets of the government.
Anyway, BSNL plans to use the proceeds to repay debt and fund expansion as it aims to regain market share in a sector that’s consolidated and now has only three private operators. The company will also seek 4G spectrum from the government. Good luck 🙄
What else are we snackin’ 🍿
👀 Musk eyes BLR - Tesla has initiated talks with the Karnataka Government, exploring a possible investment in a research facility in Bengaluru. The discussions are in the preliminary stages but if they come into fruition then India will be the second country outside the US to have a Tesla research Centre.
🏔️ Setting records - PM Modi is likely to inaugurate the world’s longest highway tunnel, The Atal Tunnel, connecting Manali with Leh on October 3. The construction of the tunnel which is above 10,000 feet has been completed in 10 years.
🤝 Banks embracing digital - SBI has announced a collaboration with Google allowing users to make card payments using Google Pay app on their smartphone. This collab is a part of SBI card’s promotion of contactless payments for a safe and enhanced customer experience.
🛩️ Aircraft R&D - Airbus has revealed 3 designs that it is studying to build a hydrogen powered aircraft as part of its plans to start a zero emissions plane service by 2035. This includes a turbofan jet with a capacity for as many as 200 passengers.
🔥 Chingari, beating records - Indian short video sharing platform Chingari has crossed more than 30 million downloads in a matter of 3 months. Strong focus on regional languages has helped a great deal in making the platform ubiquitous among TikTok fans.
😷 Silver lining - India has reported more than 90k recoveries for the third day in a row and has now crossed the landmark of more than 80% national recovery rate. According to the health ministry more than 43 lakh people have recovered so far.
🚪 Stellar debut - Route Mobile closed 86% higher during its IPO debut as enthusiastic retail investors couldn’t get enough of the communications software company. The successful IPO also warms up the stage hopefully for more tech-IPOs in India as a slew of mature startups are waiting for their turn in a favorable macro environment.
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