Good morning! Financial Times reports that porn websites like Pornhub, Xvideos and Stripchat will now fall under the ambit of the European Union’s Digital Service Act (DSA). DSA is a sweeping legislation targeted at content moderation online. Each of these three websites has more than 45 million users and are thus deemed “very large platforms” under the Act. Hence, they’ll be required to implement provisions like age verification and take responsibility for all the content on the platform. Now, that’s one piece of legislation we can all back. 

🎧 Crypto is back from the grave. Also in today’s edition: the succession battle for LG gets uglier by the day. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

Dinesh Narayanan, Venkat Ananth, and Adarsh Singh also contributed to today’s edition.

The Market Signal 

Stocks & Economy: It was like a switch being turned off. Indian equities, which were moving steady even if a bit subdued until lunchtime on Wednesday, suddenly turned bearish. They kept falling for the rest of the day. 

Global fall: US indices snapped their 10-day rising streak, with the Nasdaq and S&P 500 plummeting in a synchronised fashion. The mood carried over to Asia this morning, with equities across the region plunging deep into the red. 

Why: Multiple reasons such as the sudden realisation that valuations have run up too high, the spike in Covid-19 cases, upbeat US consumer confidence, and conflict in the Red Sea pushing up oil prices may have contributed to the negative sentiment. The GIFT Nifty, however, is indicating a spring-back today. 

Curbing growth: The Reserve Bank of India said that India’s economic growth is threatened by inflation which is restricting discretionary consumer spending, which, in turn, is holding back manufacturers’ capital expenditure.

GOVERNANCE

Tatas Tighten Grip On Tatanagar

The pieces are falling in place for the Tatas to regain full control of India’s oldest planned industrial city conceived by group founder Jamsetji Tata. 

Why now: Jharkhand has cleared a long-pending proposal to give Jamshedpur the constitutional status of an industrial township with special governing arrangements. The state had not done it all these years, fearing it would rob the region of central funds. 

Jamshedpur’s governance was in limbo and questioned in the Supreme Court as it was neither declared as an industrial township, nor was an elected administrative body in place to run it. The state’s decision will now lead to the setting up of a nominated municipal council with representatives of Tata Steel, the state government, and the local people. 

The Tatas already manage utilities serving the city. A selected municipality will give them all the levers to run the city of 1.69 million people. 

F&B

Indian Franchises Go International

Varun Beverages Ltd (VBL), the largest bottler of non-alcoholic beverages in India and the second-largest PepsiCo bottler outside the US, has acquired South African bottler Bevco for 3 billion South African rand (₹1,363 crore or $163.7 million).

VBL also does business in Morocco, Zambia, and Zimbabwe, but South Africa is the largest soft drinks market in Africa. Bevco also has PepsiCo franchise rights in Lesotho and Eswatini, and distribution rights in Botswana and Namibia.

Elsewhere: Quick service restaurant (QSR) operator Devyani International Ltd has acquired a 93% stake in KFC’s Thai franchisee, Restaurants Development Co Ltd. KFC is a runaway success in Thailand, having over four times as many stores as its next biggest QSR competitor, McDonald’s. Devyani wants to double the KFC store count in Thailand over the next decade—a ripe opportunity given the QSR slowdown back home. That said, not all Indian franchisees have had luck abroad.

ENTERTAINMENT

Netflix Data: Sliced And Diced

For all the buzz it got, Netflix’s recently released ‘engagement report’ only ranks titles by the total number of hours viewers cumulatively spent watching them. Is that enough to decide if a show is a hit? Probably not. Variety used independent data to show what factors decide what title to invest in. Two factors stand out: unique viewers and completion rates. 

Data shows titles like 1899 were rightfully cancelled after one season: they had extremely poor completion rates despite attracting a lot of unique viewers. Meanwhile, The Upshaws was renewed despite few viewers because its completion rate was higher than even that of Netflix’s biggest recent hit Wednesday. 

Trump card: So what if the data isn’t actionable? Hollywood agents are hoping to rely on Netflix’s data to negotiate better. Agents say that despite the sketchy details, the engagement report allows comparisons between titles, helping creators argue for a renewal or learn from underperformers. 

The Signal 

It’s in streaming platforms’ interest to keep real data on their viewership and the success of their shows under wraps. But Netflix’s move may prompt other platforms to release some numbers as well. This data may not be much, but for writers and filmmakers struggling with slashed budgets and smaller content slates, even a little bit can help negotiate with platforms from firmer ground. 

In India, where there are few formal unions representing film and OTT industry workers, the trickle of data could be the only card that creators are left to play. 

ARTIFICIAL INTELLIGENCE

Microsoft Joins The Band

Microsoft’s generative AI push just got a literal tune up. A partnership with AI-based music creation app Suno AI will allow its Copilot users to compose songs and tunes.

Jam Sesh: In doing so, Microsoft joins fellow ‘Big Tech’ companies such as Google (via YouTube) and Meta (AudioCraft) in the prompt-based music creation field, besides AI upstarts Stability AI and Riffusion.

Tricky times: Microsoft’s entry comes when the entertainment industry is just about coming to terms with generative AI’s disruptive potential, following a 148 day-long strike. However, (legitimate) questions over ownership (and royalty), copyrights, and deep fakes remain, given how gen AI relies on datasets (in this case music, lyrics, tunes) to train models. Alternatives such as “co-creation” are emerging.

However: Big Tech cannot dodge the record label bullet. YouTube, for instance, has collab-ed with Universal Music Group to experiment with an “AI music incubator.”

PS: Our flagship podcast, The Signal Daily, delved deeper into this issue in August. Tune into the episode here (Spotify)

GEOPOLITICS

Hostage Theatre

Never mind that much of Hamas’ money trail leads to Turkey. The country is playing a critical role in prisoner swaps between the US and Russia, and Russia and Ukraine. How did it get here?

Details: As The Wall Street Journal elaborates, Ankara brokered the 2022 hostage swap of Russian pilot Konstantin Yaroshenko—charged with cocaine smuggling in the US—and former US marine Trevor Reed, held prisoner by Moscow while on a trip to Russia. Credit goes to Hakan Fidan, the Turkish spy chief so diplomatic, he’s built bridges with both Washington and Moscow. It helps that Turkey, a NATO member that supplies military goods to both Russia and Ukraine, is viewed as “neutral”.

The Biden administration is increasingly relying on authoritarian states Turkey, Qatar, Saudi Arabia, and the UAE for backchannel negotiating between the east and west. There was a time Switzerland played that role. No more.

FYI

In the nick of time: Media companies Sony Group and Zee Entertainment have begun talks to extend the deal deadline to complete their $10 billion merger. The deal expires today. 

Startup Goliath: TikTok owner Bytedance is expected to clock $110 billion in sales in 2023, comfortably beating rivals Tencent and Meta Platforms.

Alone is better: iPhone maker Foxconn has applied to set up a semiconductor fab unit in India. The move comes after its joint venture with Vedanta to build a chip factory in Gujarat fell through. 

Virus returns: India is on high alert after the number of single-day Covid-19 cases rose to 614 even as three states reported 21 cases of the JN.1 variant. The country saw 16 Covid-related deaths in the past two weeks, although all patients had comorbidities. 

Cut to size: Potential investors have slashed local language social network operator ShareChat’s valuation to $1.5 billion from $4.9 billion in the previous funding round. The company has also laid off 200 employees.

Feel free: RazorPay and Cashfree can resume merchant onboarding after the Reserve Bank of India lifted its year-long ban on the payment aggregators. 

Phew! Beleaguered edtech firm BYJU’S’ shareholders cleared its FY22 financial accounts and passed all resolutions proposed in a three-hour-long virtual annual general meeting. 

THE DAILY DIGIT

192,000

The number of jobs Gazans lost after October 7, the day Hamas raided Israel, according to the International Labour Organisation. That’s more than two-thirds of all jobs on the strip. (Reuters) 

FWIW

About time: They say love knows no bounds, and single/widowed retirees in the US are proving it right. Many are shunning the stigma and coming forward to date again. Helping them achieve that are local services that have popped up to cater to this section of the populace. These services guide them through the dating ‘environment’ by organising workshops on how to date, which apps to use and most importantly, how to recognise a scam. Some of these workshops have now materialised into speed-dating events as well. Clearly, the heart wants what it wants. 

Laser time: In a massive W for NASA, the agency managed to beam back an ultra-high definition video to Earth from nearly 31 million kilometres. For context, that distance is 80 times the distance between the Earth and the moon. Scientists achieved this feat by encoding the 15-second video with a near-infrared laser. Yes, laser. This is part of NASA’s ongoing Deep Space Optical Communications experiment onboard the Psyche spacecraft. The result is a major step in advancing troves of data over long distances, something that’d greatly help in any future space exploration. Science FTW!

Reading rhythms: That’s the name of an event for “a reading party.” If that sounds like the stuff of your dreams, then you’d love this story. Started by a bunch of friends concerned about their own dwindling reading time, it has now evolved into a major New York event. All you’ve to do is show up with a book, commit to reading a chapter or two and then chat with strangers about what you’ve just read. Detractors of course had their say but the founders are unfazed. People are willing to pay a $10 entry fee, with 270 others on the wait-list to get in. It seems like the party’s just getting started.