Top Business News of the Week: Restaurants Rebel Against Food Delivery Apps, Trade War Escalates, Govt Announces Reforms

Finance Minister Nirmala Sitharaman announces slew of reforms in an attempt to boost the slowing economy. “Unprecedented in 70 years”: NITI Aayog VC acknowledges economic slowdown. Amazon will reportedly launch a food delivery service in October. After days of protests, #LogOut movement ends with Zomato, Swiggy, Dineout etc. promising to stop deep discounts. Facebook will hire journalists to curate content on its upcoming “News Tab”. Amazon lists thousands of banned, unsafe and mislabeled products. Google asks employees to keep their politics out of the workplace. US and China impose more tariffs on each other in day of escalation. Trump “orders” American companies to shift base from China and look for alternatives. Germany issues zero-percent 30-year bond for first time. Alibaba postpones Hong Kong listing due to massive ongoing pro-democracy protests. Japan-South Korea tensions continue to spiral.

 

 ECONOMY  

Finance Minister Nirmala Sitharaman announces slew of reforms in an attempt to boost the slowing economy. “Unprecedented in 70 years”: NITI Aayog VC acknowledges economic slowdown.

 

Mending Ways: On Friday evening, Nirmala Sitharaman held a press conference where she announced a slew of measures in a bid to boost the slowing economy. The Finance Minister sought to boost business sentiment, encourage buying and address liquidity concerns with these announcements, some of which were backtracks of Budget commitments that did nothing to delight businesses.

 

The main announcements: surcharge on FPIs withdrawn, CSR violations no longer criminal offenses, more liquidity through capital infusion, fast-tracking pending GST dues, one-time settlement policy for MSMEs. The Minister also promised more reforms in the coming weeks. More here.

 

Will It Be Enough?: Markets are expected to react positively to the reform package on Monday. But will it be sufficient to reverse post-Budget stock market losses? Only time will tell.

 

A Long Road Ahead: NITI Aayog Vice Chairman Rajiv Kumar acknowledged the crisis in the financial sector and the ongoing economic slowdown, describing it as an “unprecedented situation”. "From last 70 years (we) have not faced this sort of liquidity situation where the entire financial sector is in churn," he said, adding that the government should do whatever it can to relieve the stresses in the private sector.

 

 FOOD TECH 

Amazon will reportedly launch a food delivery service in October. After days of protests, #LogOut movement ends with Zomato, Swiggy, Dineout etc. promising to stop deep discounts.

 

Chef Bezos: India’s food delivery market might soon see an Amazonian addition.

 

Amazon is reportedly planning to launch a food delivery service this October under the name “Amazon Restaurant”. The service could be accessible through the e-commerce giant’s grocery delivery app Prime Now.

 

What: In the past few days, the restaurant industry has enagaged in a coordinated campaign against food service aggregators like Zomato, Swiggy, Nearbuy, Dineout, EazyDiner, and Magicpin.

 

Why: Their grievances are many, but chiefly have to do with these companies’ deep  discounts. As anyone who has ordered food online knows, food delivery apps have an obsession with offering steep discounts to stay competitive.

 

These discounts/cashbacks/BOGO offers are reportedly funded by the restaurant industry and not the aggregators. Additional complaints are the steep commissions demanded, miscommunication, lack of transparency, one-sided contracts, and threats to downgrade restaurants if they refuse to adhere to discount policies.

 

Action & Reaction: Industry trade bodies launched a #LogOut movement on August 18. 1,200+ restaurants pulled of food tech platforms to protest deep discounting. In response, the food tech companies agreed to alter their features to “detox customers from addiction of deep discounts”. 

 

 TECH  

Facebook will hire journalists to curate content on its upcoming “News Tab”. Amazon lists thousands of banned, unsafe and mislabeled products. Google asks employees to keep their politics out of the workplace.

 

Zuckerberg News Network: It was recently revealed that Facebook was planning on launching a “News Tab” on its platform and was willing to pay publishers millions to feature their stories. Now, Facebook is reportedly hiring a “small team” of journalists to select stories for this News Tab. While most stories featured on the tab will be arranged algorithmically, the top stories of each day will be identified by this team of veteran journalists.

 

Your Order, Which Is Banned By Federal Agencies, Will Be Delivered By Tomorrow: You might expect Amazon to be a hot-shot very-posh big-town super-market that adheres to common-sense regulations and rules. But it seems the e-commerce giant has evolved to be akin to a flea market.

 

A Wall Street Journal investigation found 4,152 items for sale on Amazon.com that have been declared unsafe by federal agencies. These items include school products with limit-breaching lead levels and sleeping mats that regulators warn can suffocate infants. Many of them are sold from Amazon warehouses and listed as “Amazon’s Choice”.

 

Criminal Negligence: It’s not unreasonable that this sort of lacklustre oversight of third-parties by Amazon has been compared to the carelessness of other big tech companies in dealing with third-parties on their own platforms. Fake news on Facebook and Twitter has real world consequences. As do shady listings on Amazon. In 2014, young Albert Stokes lost his life after the helmet he bought on Amazon came off during an accident. The helmet had been recalled by regulators but was still listed on Amazon – that too as regulation-compliant, that too till as late as last month.

 

 TRADE WAR 

US and China impose more tariffs on each other in day of escalation. Trump “orders” American companies to shift base from China and look for alternatives.

 

Retaliation Day: If you’re someone with investments in China or the US, this weekend’s going to be an onerous ordeal for you. On Friday, both sides of the trade war escalated tensions. China announced a new round of retaliatory tariffs on about $75bn of US goods. Only a few hours later, Washington responded. Trump tweeted that existing American tariffs on China would be increased.

 

Stock markets dived as trade tensions escalated. The Dow dropped 1.9% while S&P500 and Nasdaq lost 2% each.

 

The Tides of War: The US President also “ordered” American companies to “start looking for an alternative to China” and bring manufacturing jobs back to the US. Ironically, this statement is similar to a tactic used by Beijing, which had earlier ordered its companies to stop buying American agricultural goods. Anyway, for all purposes the US-China trade war is now full-blown.

 

 WORLD 

Germany issues zero-percent 30-year bond for first time. Alibaba postpones Hong Kong listing due to massive ongoing pro-democracy protests. Japan-South Korea tensions continue to spiral.

 

Zero Hero: For the first time, Germany has sold a zero-percent 30-year bond. This means that Berlin will not make any interest payments to those buying the bond until it matures in August 2050. Thus investors have an option to place their money in a long-term safe-haven asset for three decades at a time when the global economy is rocked by uncertainties. More details here.
 

Jack Nah: China’s biggest e-commerce company Alibaba was set to list in Hong Kong in late August. But it will delay the listing on account of the massive protests that have been taking place in the special administrative region. The pro-democracy protests have continued unabated for about 11 weeks, sparked by a controversial extradition bill that would have allowed Beijing to extradite “fugitives” to mainland China to be tried under Chinese law.  

 

There’s A Fire In My Seoul: Coming to another trade war, one that’s spiraling in the West Pacific, South Korea has announced it will no longer adhere to intelligence sharing agreements with Japan. The two countries were uneasy allies at the best of times. Now, tensions have breached the surface and they threaten global tech supply chains, not to mention the impact another trade war could inflict on an already slowing world economy.

  

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