Also in this letter:
■ iPhone 14 production faces supply constraints in India: Rajeev Chandrasekhar
■ Twitter losing most active users, suggest internal docs
■ Regulating digital platforms is CCI’s big challenge: retiring chairman
Big Tech firms’ sluggish revenue growth harbinger of imminent recession
Microsoft Corp posted its slowest quarterly revenue growth in five years on Tuesday as tough macroeconomic conditions hit PC sales and slowed cloud growth, which had supercharged its earnings for years.
The company reported revenue of $50.12 billion for the July-September quarter, an 11% increase year-on-year, and slightly above analysts’ expectations of $49.61 billion, according to Refinitiv IBES data.
Google-parent Alphabet Inc missed market estimates for quarterly revenue on Tuesday as advertisers cut back on spending in the face of an economic slowdown.
Softer guidance: “The Street is fearing a softer guide from Nadella and that is contributing to the weakness after hours,” said Daniel Ives, an analyst at Wedbush Securities, referring to CEO Satya Nadella’s earnings call.
“The PC market was worse than we expected in Q1,” Brett Iversen, head of Microsoft’s investor relations, told Reuters. “We continued to see that deteriorate throughout the quarter, which impacted our Windows OEM business.”
Cutback on ad spends: Google’s advertising revenue was $54.48 billion in the third quarter, compared with $53.13 billion last year. The company said total revenue stood at $69.09 billion in the quarter that ended September 30, compared with $65.12 billion a year earlier.
The market for online advertising has been strained globally on fears that consumers may curb their spending as they grapple with a spike in interest rates and runaway inflation, prompting companies such as Snap Inc to issue a revenue growth warning.
Music streaming platform Spotify recorded a gross margin of 24.7% in the September quarter, which missed its own guidance. The company also encountered “slower than forecast advertising growth given the challenging macro environment.”
“This is an early indicator of the concerns businesses are having about the economy,” Spotify CEO Daniel Ek told the news agency Reuters.
iPhone 14 production faces supply constraints in India: IT minister
Minister of state for electronics and information technology (IT) Rajeev Chandrasekhar said on Wednesday that he has held talks with iPhone maker Apple regarding a shortage of the iPhone 14 Pro in India.
The minister was responding to a tweet that mentioned a shortage of iPhone Pro and iPhone Pro Max models in Delhi-NCR.
Quote Unquote: “I have spoken with Apple and they have said while iphone14 demand is being met also with India production, the iphone14 Pro demand has surged and is facing supply constraints which they are addressing,” he tweeted.
He also said that private sales of these two models are probably “alternate” supply channels.
Apple in India: Apple began manufacturing iPhones in India in 2017. This year, iPhone sales in India nearly doubled in the June quarter over the previous year.
In September, credit rating agency Moody’s said manufacturing of the iPhone 14 in India within weeks of the global launch demonstrates the maturity of Apple’s manufacturing capabilities in the country.
Race gathers pace: The race to manufacture iPhones in India has heated up over the past six months with big names such as Vedanta and Tatas entering the fray.
Recently, Vedanta announced it would set up a hub to manufacture iPhones and television equipment in Maharashtra. The mining giant will hold a 60% stake in the joint venture, while Taiwanese chip maker Foxconn will own the remaining 40%.
Regulating digital platforms is CCI’s big challenge: retiring chairman
Regulating digital platforms will be a key challenge for India’s anti-trust regulator in the future, said Ashok Kumar Gupta, retiring Competition Commission of India (CCI) chairman.
In fast-moving digital markets, protracted litigation and delayed interventions could prove to be “expensive or even futile”, he said, making a case for the need for CCI to take preventive steps through ‘ex-ante’ regulations to address competition concerns.
From the horse’s mouth: “Their (digital platforms’) control over critical digital infrastructure and power to set rules and determine terms of access, makes them de facto ‘gatekeepers’ of online markets,” he said.
“Such rule-setting power, control over user data and user interface, help maintain and strengthen the platforms’ long-term market position in the core platform markets, while also expanding the same into adjacent markets,” Gupta said, highlighting the related competition concerns.
He said the resultant irreparable adverse consequences for competition and consumer welfare warrant effective regulatory scrutiny over large digital platforms.
Evaluating steps: After incurring two hefty fines from the Competition Commission of India (CCI) in two weeks for abusing its dominant market position, tech giant Google on Wednesday said it was committed to its users and developers, and reviewing the decision to evaluate next steps.
The Indian regulator on Tuesday fined Google Rs 936 crore for indulging in anti-competitive practices in three cases filed against the internet giant. Last week, the competition watchdog had penalised Google Rs 1,337.76 crore for abusing its dominant market position.
Also read | ETtech Explainer: why CCI has penalised Google again with a Rs 936 crore penalty
Twitter is losing its most active users, internal documents show
Twitter is struggling to keep its most active users, who are vital to its business, engaged, underscoring a challenge faced by Tesla Inc chief executive Elon Musk as he approaches a deadline to close his $44-billion deal to buy the company.
Internal research by Twitter suggests “heavy tweeters” account for less than 10% of monthly overall users but generate 90% of all tweets and half of global revenue.
Heavy Tweeters going light: A “heavy tweeter” is defined as someone who logs in to Twitter six or seven days a week and tweets about three to four times a week, according to an internal document titled “Where did the Tweeters Go?”
The research further suggests that heavy tweeters have been in “absolute decline” since the pandemic began.
Shifting interests: The research also found a shift in interests over the past two years among Twitter’s most active English-speaking users, which could make the platform less attractive to advertisers.
The report found that cryptocurrency and “not safe for work” (NSFW) content, including nudity and pornography, are the highest-growing topics of interest among English-speaking heavy users.
Also read | Elon Musk may close Twitter deal by Friday: report
TWEET OF THE DAY
Small tech firms, startups greenlight moonlighting
Even as top-tier IT services companies fret about moonlighting, mid-tier technology companies and tech startups such as Zoho, Kissflow, and M2P Fintech are holding open discussions with employees to inspire confidence among moonlighters to disclose side projects and reset expectations, according to a report in The Times of India.
However, these firms have clarified that the practice is acceptable as long as the company’s intellectual property is not compromised.
Taking the lead: API infrastructure startup M2P Fintech said moonlighting is a reality among the developer community today. The company has openly discussed the issue with employees and clarified its stance to them.
“We need to consider the needs of people who are trying to work on startup ideas or projects not directly related to the IP created here, and allow them to pursue these ideas while having a stable salary,” said Prabhu Rangarajan, co-founder and COO of M2P Fintech.
What’s brewing? Some startups are working to tweak employment contracts to accommodate the needs of employees working on non-competing startup ideas while holding full-time positions at the company. Others are launching specific programmes to hire and accommodate moonlighters.
Kissflow founder and CEO Suresh Sambandam said the company has discussed the issue with employees in a townhall and urged them to assess the nature of their side gigs.
M2P is working to start an internal idea group where employees can bounce off startup ideas and explore a product-market fit.
Today’s ETtech Top 5 newsletter was curated by Gaurab Dasgupta in New Delhi and Siddharth Sharma in Bengaluru. Graphics and illustrations by Rahul Awasthi.
