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Asia Tech Review: 16 June 2020
America's reliance on China for AI, India's Postman is no longer a secret and Southeast Asia's ride-hailing war is now all about payments
There’s something different about this week’s issue. I decided to give Substack a go after years of deliberation. I know that I’m following the trend… and doing so very late, too.
We’ll see how it goes. If you have a strong opinion either way, please do let me know. The newsletter will also return to Mondays again. A small technical hitch is why it went out a little later today.
Now let’s get to this week’s issue.
America’s AI push relies on China
A backlash against China could blunt America’s AI push, according to a study published by the New York Times. AI is seen a major battleground between the US and China, but, interestingly, the US is dependent on its rival for talent.
That’s according to a study by think tank Marco Polo which found, among other things, that one-third of the America’s top AI researchers come from China and most work in the US. Moves to limit Chinese students and Chinese tech workers coming to the US could, thus, harm America push to dominate AI.
In other news of US-Sino collateral damage: US military ban locks two Chinese universities out of popular software
Zoom and Apple follow censorship orders
Zoom raised concerns when it shut down an account belonging to US-based Chinese activists after they held an event to mark the anniversary of the Tiananmen Square Massacre on the video service. The company later reversed the decision and admitted its actions “should not have impacted users outside of mainland China.”
Zoom plans to release a transparency report and details of its censorship response policy at the end of June. But it looks like it will implement some kind of geo-location blocking to prevent attendees joining such calls if they are illegal in their country.
The App Store censorship saga continues after two popular podcast apps were removed from the Chinese version of the App Store “at the request of the Cyberspace Administration of China.”
Blocking a website is like trying to stop lots of trucks from delivering a banned book; it requires an infrastructure of technical tools (things like China’s “Great Firewall”), and enterprising users can often find a way around it. Banning an app from an app store, by contrast, is like shutting down the printing press before the book is ever published. If the app isn’t in a country’s app store, it effectively doesn’t exist. The censorship is nearly total and inescapable.
In other news
The non-US IPO rush continues with JD.com reportedly plans to raise $3.9B from a secondary listing in Hong Kong, which it claims was over-subscribed multiple times. Games publisher NetEase raised $2.7B in a listing earlier in the week. Classifieds site 58.com meanwhile is delisting from the NASDAQ to go private. For those do go public, the Luckin Coffee fraud has auditors asking tougher questions.
Zynn, the TikTok alternative launched in the US by ByteDance’s Chinese rival Kuaishou, is apparently full of stolen content. It launched with a twist—it pays people to watch videos—but it was removed from the Google Play Store. Apple has seemingly not yanked it yet.
China’s ‘Beidou’ GPS network is set to come online this month
Ant Financial will spin out its database service OceanBase
There’s drama at ARM after the SoftBank-owned chip firm fired the head of its China business (🔒)
Uber’s former head of India and South Asia is now its head of APAC—a job that stitches together disparate businesses in Hong Kong, Taiwan, Japan, Korea, Australia and New Zealand. Uber is seeking a new home in APAC after deciding that it will leave Singapore. Hong Kong is its preference but it remains unclear how legal its business is there, hence a throwback to the days of newspaper ads.
Cathay Pacific is getting a $5B bailout led by the Hong Kong government
South China Morning Post, the Hong Kong-based paper owned by Alibaba, said its revenue dropped 50% in Q1
Postman collects $2B valuation
One of India’s under-estimated software companies is finally coming out. Postman helps companies develop, test and manage APIs, and it just scored a $150M investment that values it at $2B. The deal had been rumoured—it was in last week’s newsletter—and it is a big jump on its $350M valuation as of last year.
I remember talking to CEO Abhinav Asthana in 2015 when Postman raised a $1M seed round and a couple of things stood out. Asthana started the service to solve a problem he had faced as a developer—product/market fit potential—and, even back then, the service was being used by teams in Box, Microsoft and Cisco—validation.
Reliance keeps on rolling
Reliance Platforms announced yet more investments: TPG ($600M for a 0.93% stake) and L Catterton ($250M for 0.39%) with reports of Saudi fund PIF coming next (2.33% for $1.5B).
That activity also takes it to 9 (soon to be 10) deals in two months as Reliance sold 25% of the business. Other invested include: Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala and Abu Dhabi Investment Authority.
Beyond this super app play, Reliance is also talking to Netflix. Its Network18 media unit is reportedly in talks to license content, according to Reuters. Reliance is also among the suitors keen to buy a stake in debt-laden Future Retail, according to Mint.
In other news
Edtech startup Byju’s is raising again (🔒)—it is not quite Reliance levels but it apparently has a $500-$600M round incoming with Hong Kong’s Baring Private Equity Asia one investor in talks
Microsoft’s venture fund now has an office in India
Twitter launched Fleets, its ephemeral feature, for users in India as well as Brazil and Italy
And Sinch, a Sweden-based voice and messaging company, is buying business communication company ACL Mobile for $70M
The Japanese government is introducing a Covid-19 tracing app that uses technology from Google and Apple.
An outside panel will weigh the validity of an investigation into Samsung heir Jay Y. Lee over a 2015 merger and alleged accounting fraud, said the Seoul Central District Prosecutors’ Office
Radar tech startup Bitsensing raised $5.8M
Ride-hailing becomes passé
Gojek and Grab’s future is all about payments and financial services, argues Bloomberg’s Tim Culpan—he cites Facebook and PayPal’s recent investment in Gojek as proof. It’s certainly a trend that’s been underway for some time. Just over the last week alone, Grab announced new services to digitise small businesses—on Grab’s platform, of course—while Gojek landed a bunch of trademarks that hint at future non-ride-hailing service.
In further proof of the importance of payments, Bloomberg reported (🔒) the merger deal between OVO (part owned by Grab) and Dana (backed by Alibaba) in Indonesia is close after investors finally agreed on valuation terms. Interesting, but frankly there’s not much new here. Reuters broke news of the deal last September, while Deal Street Asia said it was close to full agreement in December. I guess it is finally progressing after Covid (presumably) held things up.
In a timely story, Reuters reported on the struggle of ride-hailing drivers during Covid-19. Despite growth in food delivery orders, Grab and Gojek drivers still found little business and income with often dozens of drivers fighting to land each order.
Netflix loses one, wins one
Meanwhile, ambitious Chinese streamer iQiyi has hired Netflix’s head of APAC (Singapore-based Yu-Chuang Kuek) to lead its international effort. The firm has prioritised Southeast Asia where its presence includes a deal with Malaysian satellite TV firm Astro, but it’s likely we can expect much more to come.
But there is good news.
Netflix has been blocked on Telkomsel, Indonesia’s top telco, since 2016, but it will soon come to an end. Why? That’s unclear but Indonesia’s upcoming digital tax—which will force Netflix and others to pay dues on what they earn in the country—is seen by many as the likely trigger.
After Indonesia and the Philippines, Thailand is the next in Southeast Asia to jump on the digital tax bandwagon.
In other news
One Championship raised $70M in new funding, but it didn’t disclose investors and made layoffs. The news comes the week after it filed it latest financials with revenue and losses ballooning. The numbers are from 2018, so are somewhat dated but One Championship now counts bartered deals (non-cash income) within revenue. That has potential to be misleading since it commonly strikes non-cash deals, as we recently wrote at The Ken (🔒).
Press freedom is under attack. In the Philippines, Rappler founder Maria Ressa and a reporter from the public were charged with cyber libel. And in Myanmar, Reuters looked at how the promise of free media when Aung San Suu Kyi’s party won the 2015 election failed to materialise. Her administration is said to have brought charges against 31 reporters. No wonder many choose to report from exile.
Ula, a wholesale e-commerce marketplace that is just 5 months old, raised $10.5M from Sequoia and others, including the entire founding team of Indian e-commerce startup Udaan. That is serious early hype. I can’t remember seeing a company in Southeast Asia grow so fast (in terms of funding) and during a pandemic, too.
Facebook said there’s no evidence of malicious intention around a surge of fake accounts that flooded the Philippines
Vietnam has won manufacturing contracts from companies eager to diversify their supply chain away from China in the wake of ongoing US-China tension, but Indonesia is stepping up to the plate, too. Nikkei Asian Review reports that it held talks with the US government in an effort to attract business from the likes of Apple, but lost out.
Unfortunately the reality right now is cutbacks. The latest example is camera company Nikon which is cutting 700 jobs across Thailand and Laos, 10% of its headcount in each location.
Outside of Asia tech
Snap took inspiration from WeChat—Tencent is a Snap investor—when it launched a slew of new features including ‘apps include Snap’ aka WeChat’s mini programs. It’ll be an interesting test of whether the concept can work outside of China
Last week on The Ken
We publish one story for each of our subscriptions each week, here’s a recap what we ran over the last week:
Kopi Kenangan wants to walk in Luckin’s path, not in its shoes link
Swallowed in the Sea, Garena’s still making waves link [free read]
Behind the paywall curtain, The Star looks much the same link
Work from home blues hit Singapore’s packed telecom space link
A stitch in time boosts LINE link
Ebix, Yatra, and the $337 million deal that got away link
Bounce, ONN Bikes’ detour from sharing to long-term caring link
Past and present haunt Future Retail’s latest stab at e-commerce link
No more takers for the ESOPs opera link
It’s Operation Diplomacy for India as Covid vaccine preparedness hots up link [free read]
How AI startup SigTuple became a cash-burning laboratory chain link
You can sample more stories on our free reads page.
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