Spotify, Slack and their bundle of troubles

Edition #123. Thursday, 17 September 2020

A 🔒 paid newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia. Someone sent you this? Subscribe to BFO

Good morning,


Jobs, jobs, jobs… gone. In the formal sector, where the young demographic has been hurt disproportionately; in the gig economy, which was once a saving grace for the government and is now a cause for distress; even in cryptocurrency, if the Indian government’s ban shuts down legitimate operations. 


Meanwhile, pioneers like Spotify and Slack are pushing for antitrust hearings against the might of the incumbent big-tech. And there’s a gulf forming between the haves and the have-nots in Covid education. Also, endangered plants and animals are at risk from Covid. Not from catching it, but from thieves and poachers. 


We’ve got some stories to tell.

Spotify, Slack, and their bundle of troubles




Apple may have launched a new Watch and iPad on 15 September. But what will likely be discussed more than either in the coming weeks is its new subscription bundle. At US$15 per month in the US and Rs 195 (US$2.7) in India for an individual plan, the subscription combines Apple’s offerings across music and video streaming, games, and cloud storage. 


This, according to its rival Spotify, gives Apple Music an unfair advantage. While Apple says the bundle is targeted at existing users of its services, Spotify has reason to worry that Apple users on its platform might ditch it for Apple Music thanks to the new plan. Standalone Spotify and Apple Music subscriptions currently cost US$10/month in the US each and Rs 120 (US$1.6) and Rs 100 (US$1.4) in India, respectively. This is what Spotify had to say after Apple’s announcement:

“We call on competition authorities to act urgently to restrict Apple’s anti-competitive behavior, which if left unchecked, will cause irreparable harm to the developer community and threaten our collective freedoms to listen, learn, create, and connect.” 

Spotify criticizes new Apple services bundle on antitrust grounds, Reuters

In 2019, Spotify accused Apple of using its App Store to crush rival services, and therefore, of being in violation of European antitrust regulation. The problem here is that Apple owns the platform and a bunch of apps that compete with standalone apps like Spotify. To borrow The Ken’s earlier reference to describe Google’s use of its Google Play app store, Apple is both dealer and player. And with regard to the bundle, Spotify is at a disadvantage since it cannot offer a similar collection of services to Apple users. The bundle is Apple’s latest attempt to close the gap with Spotify, which has not really gone according to plan so far.


There is a similar battle brewing between workplace messaging app Slack and Microsoft over the latter’s Teams—a Slack rival—being offered with Microsoft’s productivity suite. Slack filed an antitrust complaint against Microsoft with the European Union in June.

“Microsoft has illegally tied its Teams product into its market-dominant Office productivity suite, force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers,” Slack said in a statement. 


Slack has long chafed at Microsoft for essentially giving away Teams to Office 365 users, who are then less likely to pay extra for additional chat or videoconferencing software.

Even if Slack is better to use than Teams (I think so, and not just because we use Slack at The Ken), Microsoft has a massive advantage in the form of enterprises that already use its products, as tech commentator Ben Thompson notes in his newsletter, Stratechery

Teams is particularly effective as a way to prevent a Microsoft customer from even trying Slack. And, in that case, it doesn’t matter how much “love” Slack put into its product: said love was not simply unrequited, but unexperienced.

Slack clearly underestimated what Microsoft could pull off. Teams had 75 million daily active users as of April 2020. Slack, on the other hand, had 12 million daily active users in October 2019—the latest data disclosed by the company. 


The Slack-Teams analogy can be extended to Spotify and Apple Music. As someone who has used both music streaming services, I think Spotify runs circles around Apple with its recommendations based on the subscriber’s listening history. Their catalogues are not that different, so the algorithm is the differentiator. But if you know what you want to listen to, and are not a big fan of curated playlists, it does not really make a difference which of the two you use. This is where the new bundle might work to Apple’s advantage. 


Spotify and Slack will both be betting on some help from antitrust bodies as they take on the might of Apple and Microsoft.

Five numbers about Covid education in India. Right now.



Two news reports, stacked one atop the other, caught my attention. They couldn’t be telling more different stories.

From the two reports, I tried to pick out numbers that tell stories of two very different Indias. The top two numbers can unlock potential for millions of learners. It’s a self-fulfilling prophecy—as the potential for online education increases, so does the cheque size.


US$1.19 billion…

…Is the amount pumped into the edtech sector in India across 36 deals, as of August 2020. Edtech platform Byju’s tops the deck with US$1.12 billion to its name.



… is the penetration of digital solutions in a potential student population of 260 million. 99% is the potential against which VCs are splashing the cash.


The bottom three numbers though, could be from a parallel universe. 



… of parents interviewed during a 5-state survey by international non-profit Oxfam, said online education “had not been delivered” to their kids, who attend government schools. 59% of students in private schools did not receive any online education either. 


80% …

… of teachers in Uttar Pradesh did not have a device to give digital lessons. 75% of classes in public and private schools were conducted on WhatsApp, followed by phone calls between teachers and students.



… of teachers surveyed fear that their schools don’t have adequate sanitation facilities to open up full-time to receive students.


The last three numbers are not about happy, self-fulfilling prophecies. Rather, they are ripple effects that a majority of underserved students will face. Staying out of schools→ lack of provisions like books, and nutrition through midday meals→ locked out of learning→ increased likelihood of dropout rates. Can edtech, from a parallel universe, stop these ripples from spiralling out of control?

Green thumb market turns black




Covid-19 quarantine measures have spawned interest in a long list of hobbies—gardening and farming among them.


Whether it’s to pass time or to make sure they have access to fresh food amid panic buying, households are stocking up on their greens.


That has certainly spiked sales for plant nurseries. But it has also brought about an unintended consequence.


In the Philippines, a wave of plant theft has been reported, including in protected natural areas. Yes, that’s right. Traders are reportedly scouring mountains and forests for common as well as endangered/threatened plants, as prices soar. Endangered species like the Giant Staghorn Fern (Platycerium grande) and threatened ones like the Green Velvet Alocasia (Alocasia micholitziana) are some of the favourites among thieves.


It’s risky to poach—anyone caught illegally gathering wild plants could face up to 12 years imprisonment and a hefty fine in the Philippines. But people are willing to take risks if pushed to the brink.


Many rural communities that lost their jobs in developing countries due to the pandemic have turned to wildlife for income.


In India, the pandemic has accelerated animal poaching as lockdowns made patrolling of protected areas more difficult. Tigers and leopards are being killed, and also species that these carnivores depend on for food—gazelles, giant squirrels, and wild boars. In Nepal, Covid restrictions have seen more forest-related crimes, including poaching and illegal logging.
Conservation groups are now urging governments to treat wildlife poaching as a priority concern. After all, scientists believe the illegal trade was what caused Covid-19 in the first place.

The scarring of India’s demographic dividend and future




The demographic breakup of job losses in the formal sector points to a worrying future for India.


The Centre for Monitoring the Indian Economy (CMIE), a private research entity, said that while workers in the 20-24 years age group accounted for less than 9% of total employment, 35% of the job losses during the pandemic came from this group. 


With companies halting expansion plans, the easily dispensable and less experienced young workforce is being laid off. 


And this could be a larger issue for India.


For a few years now, India’s economic growth has been driven by consumption; not government spending or private company expenditure. In fact, consumption contributes to 57% of India’s gross domestic product (GDP). 


According to the Boston Consulting Group (BCG), a management consulting firm, aspiring and affluent households with an annual income between Rs 5 lakh (US$6,800) and Rs 20 lakh (US$27,201) have spurred domestic consumption in India over the past decade. This income group, which the young demographic fits right into, contributed to 43% of the annual consumption in the country in 2018.


But job losses could change all that by creating a generation of ‘scarred’ consumers.


Global studies have found that major events, whether economic or non-economic, have a lasting influence on the behaviour of people who live through it.  The experience of large shocks, such as financial recessions, exposure to war during childhood, and the experience of a natural disaster can cause people to become more risk-averse. More so, if they believe that such events have a recurring pattern. 


Pandemics certainly seem to fit into the ‘recurring’ theme of major events. 


The effect of this could be lower financial risk taking by the ‘scarred’ generation. Which means less investments in wealth creating assets like stocks; the inability to commit to large ticket purchases like homes; and more savings to tide over future economic upheavals. The one industry that benefits is insurance. Both health and life insurance have seen increased demand as the fear of contracting the virus and mortality sets in. 


This also creates the paradox of thrift as it’s known in economics. The more people turn risk-averse, the less they spend. The less they spend, the worse the economic growth and employment prospects. And so, they save more, which prolongs the economic downturn. 


It’s a negative feedback loop.


For India, unless employment for the young demographic is addressed quickly, the glory days of growth are behind it.

Nothing cryptic about this




India’s cryptocurrency story writes itself. 


6 April 2018: The Reserve Bank of India (RBI) bans commercial banks from servicing crypto traders and exchanges.


4 March 2020: Supreme Court overturns RBI’s ban on cryptocurrency.


Crypto trading activity in India spikes. 

“We saw nearly a 10x spike in sign-ups, post the Supreme Court judgment. The BTC/INR (Bitcoin to Indian Rupees) trading pair has seen 78.36% growth in the past 50 days,” said Sumit Gupta, founder, CoinDCX who added that the exchange has acquired 50,000 users in less than 50 days.

Crypto trading rises in India after SC overturns RBI payments ban, Livemint

3 September 2020: Twitter said the account linked to Indian Prime Minister Narendra Modi’s personal website was hacked. The hackers posted a tweet asking for donations to the PM National Relief Fund using Bitcoin.

Source: Twitter

15 September 2020: The government, this time, plans to introduce a law to ban cryptocurrency trading.


While elsewhere, investors are treating cryptocurrencies as a safe haven for investments, the Indian government’s fear of cryptocurrency could cripple an emerging industry, and with it, thousands of jobs.

There goes last year’s job creation hero




Mobility has been hit really hard by the pandemic. Particularly ride-hailing. The US$10 billion industry is set to lose a third of its value. From as many as 800,000 cabs, ride-hailing companies, Ola and Uber, saw its number fall to 200,000-300,000 as the demand plummeted to 20-30% of pre-Covid levels. Many drivers are on the verge of losing their cars as EMI obligations come to haunt them.


The hard fought network effect—bringing drivers and customers onto the platform—created in every city where Ola and Uber operated, has been undone.


Rewind to 2019. Ride-hailing was used as a face-saver in January last year to counter the infamous leaked employment data that showed unemployment at a four decade low. The Indian government’s think-tank, Niti Aayog, said that more than 2 million jobs were created by ride-hailing companies, as rides grew to 4 million from 1 million in 2015. 


For the government, ride-hailing has taken a u-turn.

Correction: In Tuesday’s edition, in the piece titled, ‘Nvidia wants to be in everything’, we wrote that until 2014, every iPhone and iPad used Arm-based chips made by Samsung. The correct year was 2010. We regret the error.

That’s a wrap for today.


Don’t forget to write in with your thoughts and observations on how this pandemic is reshaping businesses, societies and economies. We will be back tomorrow.


Stay safe,


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Beyond The First Order is a paid daily newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia. This newsletter is published by The Ken—a digital, subscription-driven publication focussing on technology, business, science and healthcare
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Spotify, Slack and their bundle of troubles

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