Indonesia and South Korea pile on Telegram over gambling and illicit content concerns
Telegram is in focus for Asia, India still going nuts for quick commerce and PDD stock crash
Welcome back,
Telegram is in hot water with its CEO arrested in France, and the company under fire globally for allowing illicit content on its platform. The trouble doesn’t stop there—South Korea and Indonesia are among the Asian countries considering bans due to concerns over enabling gambling, illicit content, and even deep fake porn.
Elsewhere, India continues to go wild for quick commerce, PPD—Temu’s parent—had a big stock crash and scammers in Southeast Asia are cashing in on buy now, pay later. Elsewhere, China’s ride-hailing firm Didi made a big investment, there’s a rare East-eats-West M&A in India, a $49B crypto scam has been identified in Cambodia and more.
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See you soon,
Jon
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News in Focus
Telegram under fire in South Korea and Indonesia for porn and gambling
When it rains, it pours. Telegram has been in crisis over the past week after French authorities denied CEO Pavel Durov when he entered the country. Durov and his company could face multiple charges around failing to prevent illicit activity on the messaging app—as is often the case, other governments have stepped in, too, particularly in Asia:
South Korea is apparently the epicentre of an emerging trend of fake pornographic images which are being distributed across Telegram, the WSJ reports:
Across a labyrinth of Telegram group chats, anonymous users submitted photos of South Korean girls and women without their permission that were manipulated into sexually explicit images and videos viewed by hundreds of thousands.
These deep fake pornographic images are said to have included victims from more than 70 Korean universities, whose yearbook photos and other images were used. Beyond this, Telegram is described as a “hotbed of digital sex crimes” in South Korea because it has also been used to facilitate trafficking—taking advantage of the platform’s lack of speed in responding to government or police requests.
Indonesia, meanwhile, is said to be considering blocking Telegram and live streaming app Bigo Live due to their alleged involvement in spreading pornography and promoting online gambling. The country previously blocked the app in 2017 over similar claims.
Telegram is well known for being difficult for governments, unlike social media companies such as Google, Meta and others. While other messaging platforms are more popular among mainstream users, we may see other Asian governments join the dissenting voices with similar claims to Indonesia and Korea while Durov and his company are in the spotlight. Of course, how to take action is another thing altogether.
Everyone is going mad about quick commerce in India
We wrote about the rise of quick commerce in India back in June, and plenty has changed even since then.
There have been plenty of stories on Zepto, which has pioneered the concept in India and raised $1B from investors over the last 90 days! That includes a very recent $340M round at a valuation of $5B which closed at the end of August but had been widely reported for weeks.
In a year, Zepto’s valuation has grown 3.5 times, aided by the growth of the rapid-delivery business and a rush of capital in the sector. The company raised $665 million at a $3.6 billion, post-money valuation in June. In August 2023, it turned a unicorn after having raised $200 million after which it was valued at $1.4 billion.
That kind of money feels very frothy but the data suggests the market and demand is here to stay. Data from BofA predicts India’s quick commerce market will grow to $22B GMV by 2027 up from $2.8B in 2023.
No wonder, the bells are ringing at major e-commerce firms:
Amazon is now reportedly expediting the creation of its own quick commerce unit which Economic Times reports will come online in early 2025. Still, it continues to hold talks with a view to investing in Swiggy and its Instamart quick commerce business before it goes public. (Swiggy itself has hired a former Flipkart exec to run its quick commerce business.)
Meanwhile, BigBasket is now seeing 50% of its sales come from its quick commerce unit, BB Now, despite it being a late entrant. “As much as $1 billion of BigBasket’s target of $1.5 billion in sales for this financial year will come from quick commerce through BB Now, people aware of the numbers said,” according to Economic Times.
PDD sees share price crash 25%
Temu may be a global star but parent firm Pinduoduo (PDD) saw its share price plummet 25% after it warned of future uncertainty and profit pressure due to increasing competition. Oh, and that despite recording record revenue in Q2.
The parent company of domestic online e-commerce platform Pinduoduo and cross-border retailer platform Temu saw its revenue reach a record 97 billion yuan (US$13.6 billion) in the June quarter, up 86 per cent year on year, but lower than the consensus analysts’ forecast of 99.9 billion yuan.
This interesting analysis from Momentum Works suggests that perhaps the company even wanted this drop—one of the many suggestions is founder Colin Huang doesn’t want to be the richest person in China (spotlight) which his firm’s impressive stock price had made it… but that’s an outlier theory.
Still there’s a frankly staggering $38B cash pile that’s been accumulated. Temu continues to launch in new markets rapidly. It just hit South Korea and Japan, having previously opened in Thailand and Brunei—yes, even Brunei apparently needs a bargain-basement ecommerce app. PDD has also returned some $1.4B in service fees to merchants using the platform, who had complained that the fees weren’t refunded in the event of a customer returning a product.
Right now, the market seems spooked by PDD’s warnings so—be it naivety or calculated—the message has been picked up. PDD’s rise has been unprecedented so who is to say what will happen next.
Scammers cash in on buy now, pay later growth
Buy now, pay later grew like a weed during Covid, today it has become standard for e-commerce in Southeast Asia. While it ostensibly helps budget-conscious consumers buy products without needing to save first and bypassing the region’s patchy credit industry, there is a darker underbelly to the industry, as Rest of World investigated:
The buy-now-pay-later (BNPL) feature is near-ubiquitous in e-commerce. But its rapid growth is powering a grey market of peer-to-peer loans, also known as cash-outs, in Southeast Asia. Hundreds of BNPL cash-out groups on Facebook connect lenders with bills to borrowers in need of cash. But lenders can disappear without making the promised payment, and borrowers sometimes do not pay the bill in full.
China
Bitmain is the dominant player in Bitcoin mining, accounting for more than 90% of the market—but the Beijing-based firm could be in trouble if it is caught up in US-China politics tensions and the potential return of Donald Trump as US President link
China invested $6.1B on a nationwide project to build eight computing hubs, according to a Xinhua report citing a senior Chinese official link
The Beijing municipal government has launched an Artificial Intelligence Standardisation Academy, with the goal of setting up rules and standards for AI products and their applications in the robotics industry link
But, the Netherlands is planning to restrict ASML from repairing and maintaining its semiconductor equipment in China, which could hinder Beijing's ambitions to build a top-tier chip industry link
While Chinese semiconductor startup Xiangdixian Computing Technology has reportedly collapsed amid a cash crunch and dismissed all employees link
Chinese entrepreneurs and venture capitalists are flocking to Silicon Valley, drawn by opportunities they believe are no longer available in China—but they're finding that investments with Chinese ties face significant resistance link
IBM is shutting down most of its R&D operations in China, impacting 1,000 employees across multiple offices link
The head of the Washington-based scientific society Optica and the leader of its foundation have both departed amid investigations into the group's long-standing partnership with the sanctioned Chinese telecom giant Huawei link
Self-driving truck company TuSimple reached a $189M settlement of a lawsuit accusing the self-driving truck technology company of defrauding shareholders by overstating its safety record and concealing three insiders' control of a Chinese trucking rival link
Didi will become the second-largest shareholder of state-backed NavInfo unit following a deal that mixes cash and the exchange of its smart driving unit link
EnFlame, a Tencent-backed AI chip startup valued at $1.65B that rivals Nvidia, has kicked off a process with an investment bank ahead of a planned initial public offering (IPO) link
Huawei reported a 34 per cent jump in revenue for the first half of 2024, continuing a strong comeback in premium smartphones after the company overcame US sanctions link
Alibaba has received approval from China’s antitrust watchdog to confirm it has ended monopolistic behaviours, over three years after a major investigation into its online practices link
India
Uber is reviving its high-end Uber Black service in India, starting with a phased rollout in Mumbai, as it looks to the premium market link
Apple has struck a deal with Airtel to provide the Indian telecom giant’s subscribers with exclusive offers for its music streaming service link
Apple’s new manufacturing plants in India could produce 600,000 jobs by March next year such is the US firm’s desire to boost its presence on Indian soil link
Voice bots created using cheap AI solutions are helping Indian companies crack the language code and reach a greater audience in the country through local languages and dialects that would usually be tricky or unsustainable to cater to link
Agrim snags $17.3M to help farmers get inputs like seeds and pesticides more easily link
We don’t often see East-eating-West in M&A but software testing platform Browserstack, last valued at $4B, acquired Berlin-based bug reporting startup Bird Eats Bug in a $20M deal link
General Atlantic, Prosus and other big-hitting investors have asked India’s Supreme Court to hear their concerns in Byju's insolvency link
India’s competition regulator has approved the $8.5B Disney-Reliance media assets merger link
CoinSwitch, a prominent Indian cryptocurrency exchange, is suing rival platform WazirX to recover nearly $10M in trapped funds following a $230M hack thought to have been carried out by North Korean hackers link
Southeast Asia
A notorious online marketplace allegedly tied to cyber scam operations and linked to the family ruling Cambodia is said to have processed more than $49B in cryptocurrency transactions since 2021, according to a new report link
Singapore plans to introduce the Protection from Scams Bill, allowing police to order banks to freeze accounts and credit cards of suspected scam targets without consent link
SME lending platform Validus raised $50M in debt financing to expand in Indonesia link
The business process outsourcing industry in the Philippines is tipped by some to shed 300,000 jobs over the next 5 years due to AI—Bloomberg looked at how AI could make or break an industry that is huge in the country link
Thai authorities raided an illegal bitcoin mine west of Bangkok after residents complained of frequent blackouts in the area for more than a month link
A global anti-piracy coalition of major studios is claiming victory against Fmovies, a major streaming network based in Vietnam, after local police shut down what it claims to be “the largest pirate streaming operation in the world” with 6.7B visits between January 2023 and June 2024 link
Tech firms must comply with Malaysia's laws, minister says, amid backlash over social media licensing plan link
Google is considering opening a large data centre in Vietnam which would mark a first from US big tech—previously onus local laws around content moderation have scuppered such plans link
South Korea
After seeing double-digit growth in the country, Uber has announced a strategic plan to double down in the country where Kakao Mobility, the ride-hailing unit linked to messaging app Kakao, dominates link
LG Electronics is considering an IPO for its India business link
The CEO of crypto firm Haru Invest was stabbed during court hearing on alleged fraud—the attacker is thought to have been one of 16,000 investors who were lured in by Haru’s offering link
Naver—the firm behind chat app Line—launched a crypto wallet in partnership with sports-focused crypto company Chiliz link
Japan
Tencent and NetEase are scaling back their investments in Japanese studios after years of spending produced few hit games and because the Chinese market appears to be rebounding—that includes the end of support for Bandai’s Blue Protocol mobile game next year link
Eight jailed after China used crypto to pay its spies in Taiwan link
Rest of Asia
Hackers allegedly connected to the North Korean government targeted the cryptocurrency industry using a zero-day affecting the Chromium browser link
Malicious North Korean packages appear again in open source code repository link