⚡️Microsoft starts firing 10,000+ people, Apple’s India pivot may be difficult

🤩 The Good

Government gives initial clearance to ~14 Apple suppliers from China. While Apple is yet to seek final approvals, this move brings it closer to ramping up domestic manufacturing of iPhones and completing its expansion in India. AirPods and iPhone assembler Luxshare Precision Industry Co. and a unit of lensmaker Sunny Optical Technology Group are among the companies who have received approval.

Maharashtra announces a partnership with EV companies Gogoro and Belrise Industries to build a $2.5B battery swapping infrastructure. Gogoro provides battery swapping ecosystems that enable mobility solutions for cities and Belrise is an automotive systems manufacturer. By entering into this MOU agreement with the state of Maharashtra, the firms will foster smart electric vehicle manufacturing and assembly. Representatives from Gogoro claim their battery charging stations have “multipurpose use,” including for farmers who needed energy during periods of peak demand.

👿 The Bad

Sequoia-backed car repair startup GoMechanic lays off ~70% of its workforce amid ‘grave errors’ in financial reporting. Due diligence conducted by EY for prospective GoMechanic investors alleged that 60 of the ~1,000 GoMechanic service centers may have violated accounting norms to overstate revenue and divert funds. After this information was relayed to Sequoia, it launched a forensic audit by a third-party firm. In a statement claiming responsibility, CEO Amit Bhasin stated that restructuring the company will require letting go of ~70% of the staff. Reports suggest that those staying on board have been directed to work without pay for the next 3 months.

🤔 Wait-and-Watch

Samsung Electronics is seeking ~₹900 crores from the government as manufacturing incentives owed to it. In 2020, India introduced production-linked incentives (PLIs) which provide cash to companies on sales of locally made smartphones. As a part of this scheme, Samsung is in discussions with the government on the incentive payout for FY2021. However, the government is willing to grant Samsung only ~₹165 crores unless it can offer further evidence and documentation to back up its claim.

Rapido approaches the Supreme Court after the Bombay High Court orders it to shut operations in Maharashtra. The High Court order prohibited Rapido from working its bikes taxis and rickshaws since it did not have a taxi aggregator license. The government had refused to grant this license as there was no state policy on licensing of bike taxis and fare structure. Since the matter has prompted a complete shutdown of Rapido’s services in the state, the company has appealed to the SC for an urgent hearing which has been scheduled for January 23.

A proposed amendment to the Information Technology Rules requires social media platforms to remove content ‘fact-checked’ by the Press Information Bureau. As per the amendment, the PIB would have final say on misleading content on social media platforms and gaming sites. The move has drawn criticism from activists and experts for handing the central government immense power in taking down news reports in the name of ‘fact-checking.’

Apple’s diversification from China to India comes with challenges like lack of infrastructure and labour issues. More than 95% of iPhones, AirPods, Macs, and iPads are made in China, where Apple also earns about a fifth of its revenue. However, geopolitical concerns and supply chain troubles have Apple searching for a viable alternative. While Apple’s strategy suggests a shift to India, a weak supply chain, low skill-level, a lack of automation, labour problems, and infrastructural challenges raise concerns.

🌎 International 

Discord acquires Gas App, a compliments-based social media platform for teenagers. The app gives a positive spin to social media by boosting users’ confidence. Gas reached 7.4M installs and almost $7M in consumer spending since its launch in summer 2022. While the terms of the acquisition have not been disclosed, Discord plans to keep Gas operating as a stand-alone product.

Netflix is anticipating its slowest quarterly revenue growth. As its ad-supported tier fails to attract subscribers in a saturated US market, the company is under pressure to cut content expenditure this year. In addition to being hit hard by dwindling consumer spending and rising production costs, increased competition from Disney+ and Amazon Prime has complicated Netflix's turnaround with its ad plan. The company added an estimated 4.5M subscribers in Q4, the lowest since 2014.

Microsoft plans to lay off 10,000+ employees by the end of March. The tech giant will trim ~5% of its workforce amid economic uncertainties and a strategic change in priorities such as towards AI. It started notifying affected employees on Wednesday. This is the company’s largest cut in about eight years. The company has hired ~75,000 people since 2019.

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