2018 was a roaring year for business. Many new situations and business innovations also shaped new government policies in India and beyond. Here’s a gist of news-making business trends that caught our eye, with questions and commentary on how we expect things to take shape going forward into 2019.
India has a billionaire fugitive problem
This year saw the rise of scamsters and billionaire fugitives in the Indian business scenario. First came Vijay Mallya, who has been under scrutiny for over two years now. As early as January 2017, Mallya was banned by SEBI from the securities market when his link to illegal fund diversions was uncovered. In June 2018, SEBI decided to extend the ban by three more years, given that Mallya is currently facing an extradition trial in UK.
However, Vijay Mallya, who in his heyday was known for his ‘king size’ extravagance, that allegedly led to the defrauding of a 17-bank-consortium of Rs 9,000 crore, put up a dramatic show when he alleged that he had met Union Finance Minister Arun Jaitley, before fleeing abroad. By the end of 2018, Mallya offered to settle dues by repaying the principal amount without the interest charges, while defending the money he poured into his now-defunct airlines business. He also seems to have agreed to return to India, but under special circumstances dictated by his own terms.
Next up was Nirav Modi, diamantaire to the celebs, and his uncle Mehul Choksi. The two are accused of perpetrating fraud against Punjab National Bank to the tune of Rs 13,000 crore! The scam shook up the Indian banking system, with the CBI reaching out to the Interpol for assistance in tracking him down. Similar in more ways than one to the Mallya case, Nirav Modi seems to have also fled to UK, from where the Centre pushed for his extradition.
India makes a case for responsible tech biz out of Whatsapp
Fake news, mob lynching, viral hoaxes; the Centre demanded that Whatsapp take responsibility for every way in which its platform was being used to disrupt law and order.
The government demanded that Whatsapp have a process to trace the origin of hoax messages to hold the perpetrator responsible for the resulting mayhem, but this request was shot down by the Facebook-owned messaging platform which claimed that it would violate its user privacy guidelines. Instead, they launched the ‘forwarded’ label in India to let people know when a message might be coming from unverified, spurious sources. Towards the end of July 2018, they were also testing a ‘suspicious link detector’ that would flag mistrustful, rabble-rousing links!
In response to yet another demand from the centre, the business created a corporate entity based out of India which will be subject to the local legal framework, which was later confirmed by IT minister Ravi Shankar Prasad. Whatsapp also appointed Facebook-alumni Komal Lahiri as its chief grievance officer for India. A little later, Abhijit Bose was appointed India head; he is expected to join in early 2019.
Later in the year, Whatsapp also gave into the RBI’s data localisation rules and set up a system to store local payment-related data on Indian shores. This move was likely of strategic importance as Kotak Mahindra Bank and Saraswat Co-operative Bank announced that they had begun offering various banking services through the messaging platform.
Online privacy is now a public concern
All year, Facebook has been haunted by the ghost of UK-based Cambridge Analytica, since media leaks revealed loose ends on the social networking platform that exposed the private information of millions of individual users to misuse.
In response to the global, public backlash, Cambridge Analytica reportedly shut down after facing financial losses, along with its parent company, Strategic Communications Laboratories.
Facebook was also sued by Washington for the scandal, and could be staring at fines worth $1.7 billion.
And if it wasn’t already a hard year for Facebook to begin with, things got even worse when hackers stole digital login codes that gave them access to nearly 50 million user accounts in September 2018. Amidst all the data privacy scandal, journalists who worked with Facebook as fact-checkers also accused the company of using their services as a window-dressing to deal with the PR crisis caused by allegations of misinformation. What more, the company had also reportedly hired a political consulting and PR firm (sounds a lot like Cambridge Analytica, doesn’t it?) to ‘dig up dirt on its competitors’. And that’s apparently when the board began mounting pressure on its founder and CEO, Mark Zuckerberg, to step down as the Chairman of its Board.
Users also had to bid goodbye to Google+ (which wasn’t, thankfully, that popular to begin with), when Google announced that a bug that had survived in its system for about two years had put data of nearly 500,000 users at risk, by exposing it to external developers.
Google, however, followed it up by taking a leaf out of Apple’s developer policy manual and tightening its user consent policies and third-party app rules.
It remains to be seen in 2019, how Facebook will clean up its act and device protocols to protect its users’ data (and might I add, its public image). It certainly didn’t receive much love when, in December, it decided to shelve Common Ground, which was aimed at reducing toxic content on the platform.
India’s E-Commerce gets a fillip as Walmart acquires controlling stake in Flipkart
In August 2018, Walmart completed the Flipkart deal and announced that there would be no change in management. Soon after, it received the green signal from the Competition Commission of India, which was followed by… changes in the management!
It started with co-founder and CEO Binny Bansal resigning after allegations of ‘serious personal misconduct’. Kalyan Krishnamurthy was to take on his responsibilities beyond his role as head of e-commerce operations. By mid-November, major restructuring and revamp was underway at the Flipkart Group, which also consists of fashion platforms like Myntra and Jabong. Sriram Venkataraman, who was the CFO, was now expected to double as the COO. Ananth Narayanan, who was heading Myntra, resigned shortly after he announced that he was confident about keeping his job. Senior members like Ravi Garikipati and Shoumyan Biswas were also reportedly on their way out.
On the business side, Flipkart launched 2GUD, a platform for refurbished goods, signalling a hefty nod at the pre-loved, pre-used goods sector.
Myntra’s foray into the brick-and-mortar retail space has also been taking shape, with major deals having been struck with labels like Mango and Esprit. With this, the platform is hoping to put a competitive front to face-off with Shopper’s Stop and Lifestyle.
Flipkart also launched a video advertisement platform with Hotstar, setting off rumour mills about the possibility of entering the online streaming business.
There were also whispers of Flipkart venturing into online travel services. But will that come to fruition? Time will tell. Nonetheless, 2019 seems to sound like an exciting year for the e-commerce (can we still call it that?) giant that has held its fort against global behemoth, Amazon.
However, the new e-commerce regulation might be a not-so-small hiccup in the company’s strategy as we go into the new year.
Indian food tech startups are hungry for more!
As 2018 hurtled towards a close, Swiggy reportedly raised fresh capital worth a whopping $1 billion! The food tech business was praised by past investors for its awesome year-on-year growth metrics, even as incoming investors were bullish about its ambitions and plans.
Along with Zomato, Swiggy featured among eight unicorn startups to emerge out of India this year, as the country’s ecosystem witnessed a surge in late-stage deals (Edu-tech startup Byju’s later joined this elite list).
Business-wise, Swiggy hoped to jump into the businesses of hyperlocal and medicine delivery (or some combination of the two), with Dash and the acquisition of on-demand delivery platform Scootsy. (Psst: The Health Ministry has come out with draft rules on sale of drugs by e-pharmacies. How’s that going to affect Swiggy’s plans in 2019?)
Zomato also looked to amp up its delivery services by acquiring Lucknow-based TechEagle Innovations, which specialises in drone technology, so as to get better at last mile deliveries that will widen its reach.
Posing sturdy competition in the domain of hyperlocal is Dunzo, a startup we expect to be about a lot more at Qrius.
Zomato also had a lot going on in terms of senior management rejigs, with Durga Raghunath being appointed as the VP of Growth in December 2018, and with initiatives like its homegrown event vertical, Zomato Live in the works, along with the company inching closer to its 100-city milestone.
With other startups in the fray like Ola’s Foodpanda, Uber Eats, and Google’s Aero, this sector is definitely one to watch out for in 2019.
How businesses deal with social injustice is also a conversation that kickstarted in 2018, especially when Zomato fired the delivery ‘boy’ who was caught on tape eating the wares he was delivering.
Jio mere laal
The rise and rise of Reliance Jio, which landed the Mukesh Ambani-led company at the second place among all the telecom firms in the country, within less than two years of its public launch. In response, the mobile telecom sector turned into a bloodbath with the Vodafone-Idea merger, along with broadband industry becoming ripe for major disruption in 2019.
Anil Ambani-owned Reliance Communications tried to piggyback on Jio’s success by striking an airways trade deal, but the Department of Telecommunications intervened by calling it a violation of its guidelines. This disrupted the former’s plans to repay creditors and avoid filing for bankruptcy. However, is this the beginning of the Ambani brothers burying their decade-long hatchet? Are other lucrative business deals within the family business in the offing?
Even as Jio makes a case for digital inclusion with its JioPhone and aggressive expansion plans into non-metro cities and rural India, Vodafone-Idea and Bharti Airtel announced their decision to disconnect users in the ‘below Rs 35 a month’ bracket, most likely to remain competitive and protect their financial interests.
In 2019, we are expecting to cover the public launch of Jio Payments.
Other things to watch out for in 2019:
Blockchain has overhauled so much already: from the trading process in the global oil and gas industry, to the telecom sector, and of course, the financial services sector; the business applications for using permissioned distributed ledgers is potentially endless, and will be explored in a deep way in 2019.
Electric vehicles are definitely going to be taking over roads across the globe, but especially so in India. At Qrius, we are watching out for Ola’s plans to expand its fleet of e-vehicles as part of its ‘Mission:Electric’, which was announced in mid-April 2018. In 2019, there might renewed efforts being made for a National Board for Electric Mobility, which will help India transition from diesel vehicle to electric ones, while aiding smoother governance across all the industries involved. This will complement transport minister Nitin Gadkari’s announcement in September 2018 that e-vehicles, along with other modes of transport running on alternative fuels, will no longer require permits to ply on Indian roads.
As states like Tamil Nadu and Maharashtra push for a plastic-free India, investments in businesses that provided alternatives in the areas of packaging and other ‘green’ innovations are something to look out for in 2019.
2018 was also a year that featured a lot of Elon Musk. From eccentric interviews to Trump-like-unabashed tweeting, not to mention his business brilliance… maybe 2019 will be a lot quieter on the Elon Musk/Tesla/Solar City/Boring Company/SpacEx front. Maybe it won’t?
Tejaswi Subramanian is a senior sub editor at Qrius.