New influencer rules ‘will raise transparency & costs’; PhonePe’s India shift drawing huge interest: CEO

New influencer rules ‘will raise transparency & costs’; PhonePe’s India shift drawing huge interest: CEO

Updated: 12 days, 4 hours, 46 minutes, 53 seconds ago

New influencer rules ‘will raise transparency & costs’; PhonePe’s India shift drawing huge interest: CEO

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Also in this letter:■ About 20 unicorns have asked about India shift: PhonePe’s Sameer Nigam
■ US sues Google over digital ads dominance
■ Expunge amendments to IT Rules, says Editors Guild

New influencer rules will increase transparency but also raise costs: DigitalROI


New guidelines on social media influencers to bring more transparency but lead to higher costs - DigitalROI
to regulate promotions could lead to higher costs for advertisers as they may need to spend more on creating compliant content, according to DigitalROI, a social media and influencer marketing company.

Catch up quick:

Last week, the government announced endorsement guidelines for celebrities and social media influencers, mandating disclosure of benefits for promoting goods or services on social media.

“This includes not only benefits and incentives, but also monetary or other compensation, trips or hotel stays, media barters, coverage and awards, free products with or without conditions, discounts, gifts and any family or personal or employment relationship,” the Union Consumer Affairs Ministry said in a release.

Such disclosures must be prominently displayed with terms such as ‘advertisement’, ‘sponsored’ or ‘paid promotion’, it added. Failing to do so will attract a fine of up to Rs 50 lakh.

Quote:

Vikas Mangla, founder of DigitalROI, said, "Consumers may become more aware of when an endorsement is sponsored, which could lead to increased scepticism about the authenticity of the endorsement. Advertisers may need to be more transparent in their relationships with influencers and other endorsers, which could lead to increased scrutiny of these relationships.”

Yes, but:

"The overall impact of the disclosure will likely depend on how strictly the regulations are enforced and how effectively they are communicated to both advertisers and consumers," Mangla added

It cost PhonePe Rs 8,000 crore to come to India, says Sameer Nigam It cost PhonePe Rs 8,000 crore to come to India, says Sameer Nigam
PhonePe cofounder and CEO Sameer Nigam said on Wednesday that since the company shifted domicile from Singapore to India,

PhonePe completed its shift from Singapore to India in October 2022.

Indian law poses challenges:

In a YouTube Live session with PhonePe cofounder and chief technology officer Rahul Chari, Nigam said Indian law poses many challenges for startups that want to shift to India, such as a capital gains tax on shareholders and investors, reset of the vesting period for employee stock options (Esops), and the inability to offset losses.

Huge tax bill:

We reported on January 4 that the government is

Esop challenges:

Nigam said that the company also had to convince several thousand employees about being back to a “zero-vesting one-year cliff” or a reset of the vesting period for their stock options.

Can’t offset losses:

“One of the things that is very common in the pre-profit startup world is your accumulating losses. As the company becomes profitable, you get to actually offset the losses, which saves you some tax. And in this case, by domiciling into India, unless the law changes by the end of March, we stand to lose about $900 million of accumulated losses, because it's considered a restructuring event,” he said.

US sues Google over digital ads dominance


google
The US Justice Department and eight states

The Justice Department asked the court to compel Google to divest its Google Ad manager suite, including its ad exchange AdX.

Allegations:

The government said in the complaint that Google is looking to "neutralise or eliminate" rivals in the online ad marketplace through acquisitions and to force advertisers to use its products by making it difficult to use competitors' offerings.

Why it matters:

This is part of a new, if slow and halting, push by the US to rein in big tech companies that have enjoyed largely unbridled growth in the past decade and a half.

Digital ads currently account for about 80% of Google's revenue, and by and large support its other, less lucrative endeavours. But the company, along with Meta, has seen its market share decline in recent years.

Google held nearly 29% of the US digital advertising market in 2022, according to research firm Insider Intelligence.

Expunge amendments to IT Rules, says Editors Guild


Expunge amendments to IT Rules: Editors Guild
The Editors Guild of India has written to Electronics and Information Technology Minister Ashwini Vaishnaw,

In a letter sent to IT Minister Ashwini Vaishnaw, the Guild asked the ministry to initiate consultations with press bodies, media organisations and other stakeholders on the regulatory framework for digital media.

Catch up quick:

The govt on January 18, proposed that any content marked ‘fake’ or ‘false’ by the Press Information Bureau (PIB)

Quote:

"This new procedure basically serves to make it easier to muzzle the free press, and will give sweeping powers to the PIB, or any 'other agency authorised by the Central Government for fact checking', to force online intermediaries to take down content that the government may find problematic," the letter said.

Cloud brings silver lining for Microsoft as sales slow


Microsoft.
Despite weakening macroeconomic conditions,

Microsoft's revenue rose 2% to $52.7 billion in the three months ended Dec. 31, compared with the average analyst estimate of $52.94 billion.

Saved by the cloud:

Microsoft’s cloud business is under the spotlight again following the viral success of chatbot ChatGPT, which answers general questions in plain language using artificial intelligence.

Azure cloud product revenue in the second quarter rose 31%, in line with estimates compiled by Visible Alpha. It has steadily grabbed market share from leader Amazon Web Services (AWS). Azure ended 2022 with 30% share in the cloud computing market, up from 20% in 2018, according to estimates from BofA Global Research. AWS dropped to 55% from 71% during the same period.

Teams, Outlook face outage:

Microsoft said on Wednesday it was investigating a networking issue that impacted multiple services including Teams and Outlook,

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Siddharth Sharma in Bengaluru. Graphics and illustrations by Rahul Awasthi.

Last Friday, India’s Department of Consumer Affairs announced new guidelines for social media influencers and celebrities, saying they must disclose promotional content or face fines of up to Rs 50 lakh. The new rules could increase transparency but also raise costs for advertisers, who will need to spend more on compliance, according to social media and influencer marketing company DigitalROI.■ About 20 unicorns have asked about India shift: PhonePe’s Sameer Nigam■ US sues Google over digital ads dominance■ Expunge amendments to IT Rules, says Editors Guild The new guidelines to social media influencers to regulate promotions could lead to higher costs for advertisers as they may need to spend more on creating compliant content, according to DigitalROI, a social media and influencer marketing company.Last week, the government announced endorsement guidelines for celebrities and social media influencers, mandating disclosure of benefits for promoting goods or services on social media.“This includes not only benefits and incentives, but also monetary or other compensation, trips or hotel stays, media barters, coverage and awards, free products with or without conditions, discounts, gifts and any family or personal or employment relationship,” the Union Consumer Affairs Ministry said in a release.Such disclosures must be prominently displayed with terms such as ‘advertisement’, ‘sponsored’ or ‘paid promotion’, it added. Failing to do so will attract a fine of up to Rs 50 lakh.Vikas Mangla, founder of DigitalROI, said, "Consumers may become more aware of when an endorsement is sponsored, which could lead to increased scepticism about the authenticity of the endorsement. Advertisers may need to be more transparent in their relationships with influencers and other endorsers, which could lead to increased scrutiny of these relationships.”"The overall impact of the disclosure will likely depend on how strictly the regulations are enforced and how effectively they are communicated to both advertisers and consumers," Mangla addedPhonePe cofounder and CEO Sameer Nigam said on Wednesday that since the company shifted domicile from Singapore to India, about 20 unicorn startups and their investors have asked the company how it went about the process, saying they too are interested in moving their headquarters to India.PhonePe completed its shift from Singapore to India in October 2022.In a YouTube Live session with PhonePe cofounder and chief technology officer Rahul Chari, Nigam said Indian law poses many challenges for startups that want to shift to India, such as a capital gains tax on shareholders and investors, reset of the vesting period for employee stock options (Esops), and the inability to offset losses.We reported on January 4 that the government is likely to gain as much as $1 billion in taxes from US-based retailing giant Walmart and other shareholders of PhonePe as part of its shift to India.Nigam said that the company also had to convince several thousand employees about being back to a “zero-vesting one-year cliff” or a reset of the vesting period for their stock options.“One of the things that is very common in the pre-profit startup world is your accumulating losses. As the company becomes profitable, you get to actually offset the losses, which saves you some tax. And in this case, by domiciling into India, unless the law changes by the end of March, we stand to lose about $900 million of accumulated losses, because it's considered a restructuring event,” he said.The US Justice Department and eight states filed a lawsuit against Alphabet's Google on Tuesday over allegations that the company abused its dominance of the digital advertising business, according to a court document.The Justice Department asked the court to compel Google to divest its Google Ad manager suite, including its ad exchange AdX.The government said in the complaint that Google is looking to "neutralise or eliminate" rivals in the online ad marketplace through acquisitions and to force advertisers to use its products by making it difficult to use competitors' offerings.This is part of a new, if slow and halting, push by the US to rein in big tech companies that have enjoyed largely unbridled growth in the past decade and a half.Digital ads currently account for about 80% of Google's revenue, and by and large support its other, less lucrative endeavours. But the company, along with Meta, has seen its market share decline in recent years.Google held nearly 29% of the US digital advertising market in 2022, according to research firm Insider Intelligence.The Editors Guild of India has written to Electronics and Information Technology Minister Ashwini Vaishnaw, urging him to "expunge" the amendments to IT Rules that seek to direct social media platforms to take down news or information identified as "fake" by the PIB's Fact Checking Unit.In a letter sent to IT Minister Ashwini Vaishnaw, the Guild asked the ministry to initiate consultations with press bodies, media organisations and other stakeholders on the regulatory framework for digital media.The govt on January 18, proposed that any content marked ‘fake’ or ‘false’ by the Press Information Bureau (PIB) will have to be taken down by social media intermediaries . The government then invited comments from the public on the proposed amendment."This new procedure basically serves to make it easier to muzzle the free press, and will give sweeping powers to the PIB, or any 'other agency authorised by the Central Government for fact checking', to force online intermediaries to take down content that the government may find problematic," the letter said.Despite weakening macroeconomic conditions, tech giant Microsoft narrowly beat market expectations on profits as it posted earnings-per-share of $2.32, compared to Wall Street estimates of $2.29. The company reported net income of $16.4 billion, a 12% fall YoY.Microsoft's revenue rose 2% to $52.7 billion in the three months ended Dec. 31, compared with the average analyst estimate of $52.94 billion.Microsoft’s cloud business is under the spotlight again following the viral success of chatbot ChatGPT, which answers general questions in plain language using artificial intelligence.Azure cloud product revenue in the second quarter rose 31%, in line with estimates compiled by Visible Alpha. It has steadily grabbed market share from leader Amazon Web Services (AWS). Azure ended 2022 with 30% share in the cloud computing market, up from 20% in 2018, according to estimates from BofA Global Research. AWS dropped to 55% from 71% during the same period.Microsoft said on Wednesday it was investigating a networking issue that impacted multiple services including Teams and Outlook, with outage reports saying the platforms were down for thousands of users in India and around the world. Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Siddharth Sharma in Bengaluru. Graphics and illustrations by Rahul Awasthi.