Good morning! In an embarrassing reveal for Google, TechCrunch reports that the company’s demo for its latest (and supposedly greatest) AI model, Gemini, was faked. The company had posted a video demonstrating the amazing multi-modal capabilities of Gemini. However, viewers were misled about, “(Gemini’s) speed, accuracy, and fundamental mode of interaction with the model”. Google has issued a statement clarifying the limits of the video. A tech company lying and misleading users… who’d have thought. 🙄

Adarsh Singh, Roshni Nair and Venkat Ananth also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: Traders the world over are awaiting US retail inflation data set to be released on Tuesday. The same day, the Federal Reserve will begin its rate-setting meeting to determine the course of action in the coming days. It will announce its decision on Wednesday, when US producer inflation data will be revealed. 

A slew of European regulators, including the European Central Bank and the Bank of England, will follow on Thursday. 

Asian stocks opened the week in anticipation that most central banks will hold interest rates at the current levels. Early movement in the GIFT Nifty is indicative of a flat opening for Indian equities. The recent rally has catapulted the National Stock Exchange to within striking distance of Hong Kong stock market’s valuation, and will likely overtake it this week.

WEALTH

Oil Lights The Supermarket Up 

Move over Big Box Retail, Big Oil has officially arrived. Walmart founder, the Walton family, has lost its title of the world’s richest family to Abu Dhabi’s Al Nahyan family. Bloomberg estimates their wealth to be $305 billion. 

Oil boom: West Asia’s royal families, flush with petrodollars, are getting richer. The Al Thani family (rulers of Qatar) also debuted on Bloomberg’s list of the world’s 25 richest families this year.

They are fuelling multi-billion dollar deals in luxury retail, real estate, sports teams, and tech startups, often through secretive structures.

India connect: The lone Indian on the list also made its fortune in oil: the Ambani family. Now in the midst of a succession, Mukesh Ambani’s family wealth and ranking has dropped marginally since 2021. 

Meanwhile, the Mistry family fell off the list after a 2022 debut. The family also lost patriarch Pallonji and heir Cyrus in quick succession last year. 

TECH

Battle of the bubbles

Looks like Apple swears by the idiom “don't share the goose that lays the golden eggs”. The company has blocked Beeper, a text service that provides iMessages on Android devices. 

What?: With nearly 50% market share in the US, iPhones rule the roost. That gives Apple’s exclusive messaging service, iMessage, an enviable advantage. iMessage also shows texts from Apple and non-Apple users differently by colour-coding them blue and green respectively, spawning the phenomenon of ‘green bubble shaming’ in the US. 

Golden egg: Apple knows that iMessage’s exclusivity is a major flex for its users. Beeper is one of many services that have tried (and failed) to bring iMessages on non-Apple devices. Competitors are now looking to regulators to upend Apple’s hold over iMessage.  

Meanwhile: The company wants one in four iPhones shipped worldwide to be made in India, with the Tata Group seeking a major role in it.  

FMCG

ITC’s Food Business Is Smoking

It pays to be in the food business. ITC has become India’s largest food FMCG (fast moving consumer goods) company by revenue, leaving behind Adani Wilmar, Britannia, Hindustan Unilever and Parle. 

The numbers: While ITC sold goods worth ₹17,100 crore (~$2 billion) in the nine months to September, Britannia stacked up ₹16,700 crore in sales and Adani Wilmar took the third spot with ₹15,900 crore in revenue. Last year, it was in the fourth spot. 

The Signal

Selling packaged foods and other FMCG products to value-conscious Indian consumers has been a tricky endeavour in the past couple of years as input costs have swung wildly even as the pandemic took a heavy toll on incomes. ITC relied on premiumisation to improve profitability of its products. Inflation was a great wheeze for FMCG companies to tweak costs while charging customers more. For instance, last year, Adani Wilmar, India’s biggest edible oil merchant, was on top riding on high cooking oil prices. This year, oil prices fell but wheat prices rose, swinging the pendulum in favour of ITC whose Aashirvaad wheat flour raked in the moolah. The company’s non-cigarette FMCG segment has steadily expanded Ebitda (earnings before interest, tax and depreciation) margins which rose from a lowly 2.5% in FY17 to 10.2% in FY23, and 11% in the second quarter of FY24. More than a third of its personal care and food products are now in the premium category, which fetches high margins.

MEDIA

Temper Tantrums

Elon Musk is mad at Disney CEO Bob Iger. In a series of posts, Musk pointed out that Disney continues to advertise on Meta, which is being sued for encouraging online paedophiles. Last month, Disney (and others) pulled ads from X (Twitter) after Musk endorsed antisemitic posts. 

Musk is right about Disney’s hypocrisy. He’s also put his finger on the real reason brands are abandoning X: its ads suck. 

Flash trade: Speaking of hypocrisy, Spotify CFO Paul Vogel is leaving the firm $9.3 million richer. Spotify’s stock rose after the company cut 1,500 jobs. Vogel moved fast, cashing out shares for a hefty sum, and promptly announced his resignation.

Raking in the $: Snapchat’s net revenue from subscriptions sold on Apple’s App Store and Google’s Play Store crossed $20 million in November. That puts Snapchat+ far ahead of X Premium (rebranded Twitter Blue). No wonder Musk is mad. 

ARTIFICIAL INTELLIGENCE

The Stage Is Set

The world’s first sweeping AI law is here (China was first but its rulebook isn’t as comprehensive as the EU’s). Negotiations over the EU AI Act were reportedly so intense, those who partook debated for nearly 24 hours and broke a coffee machine that couldn’t keep up with the demand anymore.

The Act goes far beyond generative AI. There are provisions for how law enforcement should use AI-powered surveillance, bans on systems that identify people based on race and sexual orientation, measures to protect copyright holders, etc. Companies that don’t adhere will be fined 7% of their global turnover. Bans on prohibited AI will take effect by the first half of 2024.

Elsewhere: The UK and US regulators are reviewing Microsoft-OpenAI’s partnership. The New York Times has a blow by blow account of last month’s OpenAI drama. And the US is winning the AI influence war against China in the UAE.

FYI

Stratospheric: Japanese baseball star Shohei Ohtani signed a mega $700 million (Rs 5,840 crore) ten-year deal with the Los Angeles Dodgers. Ohtani’s deal is the largest individual active contract for a professional across all sports.

Blocked: The Home Ministry has withdrawn the Church of North India’s licence to accept and use foreign contributions for alleged rule violations.

Sluggish: Indian startups raised a mere $7 billion (Rs 58,400 crore) in capital in 2023, according to Tracxn data, the lowest in five years, while only one Indian startup—Zepto—achieved unicorn status. 

Cancelled? University of Pennsylvania president Elizabeth Magill stepped down from her position after the university received criticism from its donors and politicians for alleged antisemitism on its campus following the Israel-Hamas war.

Welcome back: The Elon Musk-owned X has reinstated conspiracy theorist Alex Jones’ account following a poll by Musk. Twitter, X’s former avatar, had banned Jones and his platform Infowars in 2018 for violation of its community standards.

Green light: The US will back a bid by the Indian government to introduce 50,000 EV buses on its roads by 2027, Bloomberg reported. This will happen via a joint $390 million fund, where the US will contribute about $150 million.

Hic! Coca-Cola has launched an alcoholic drink Lemon-Dou, a ready mix of Japanese brew shochu and lime, from its global portfolio in India.

THE DAILY DIGIT

36,838

The number of URLs blocked by the Government of India under Section 69A of the Information Technology Act, 2000, between January 2018 and October 2023. (Hindustan Times) 

FWIW

To spud or not: The great American exceptionalism is now extending to vegetables. The U.S. Dietary Guidelines Advisory Committee is considering removing potato from its vegetable status. Instead, the Committee wants to put it firmly in the carbs bracket. The reason? Americans’ low nutrient intake. Parents have mixed feelings about the proposed change, though. Some say that it’s a gateway vegetable to others while the rest insist otherwise. Grain Chain, a grains-industry coalition, is protesting against this proposal as they feel clubbing potatoes with them would only lead to Americans shunning grains. Boy, that is some love for the spud. 

Lost art: Geishas are perhaps one of the most recognisable facets of Japanese culture. Yet their numbers are dwindling. The centuries old tradition requires stringent training in music, dancing and etiquette, something not many Japanese women look forward to. Geishas’ misportrayal as prostitutes in pop culture (looking at you, Michael Scott) further adds to its restricted appeal. To combat this, the remaining Geishas are trying to dispel these perceptions by adding a bit of humour to their performances and making them more accessible to young customers. Really hope they succeed. 

Lungi takes over: The humble lungi is a fashion statement now. From big fashion brands like Zara to small Indian labels like The Sufi Studio, Soochiem Noolum etc, everyone is in love with the lungi. To make it ready for the ramp, brands are turning them into statement pieces by attaching printed borders that showcase local art works. Some are also adding a touch of practicality to these lungis through pockets and waistbands. For fashion enthusiasts, lungi’s gender fluid style is a major W in its favour. Honestly, this is a much better PR than lungi dance.