Dream11 goes offline in K’taka; Urban Company responds to protestors

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When Karnataka’s gaming law came into force last week, most online gaming companies halted operations in the state. But Dream11 remained online, saying it had not violated the law. Now it too has halted operations after the police registered an FIR against its founders. It still maintains it is not in breach of the law.Also in this letter:

  • Will work to increase partners’ earnings: Urban Company
  • Why ecomm festive sales have been slower than predicted
  • Women taking the charge at Indian EV firms

Dream11 halt operations in Karnataka after FIR against cofounders

On Sunday, online fantasy gaming platform Dream11 said it had suspended operations in Karnataka as it battles allegations that it violated the state’s new online gaming law, which bans “games of chance”.Catch up quick: When the law came into effect on October 5, other gaming companies such as Mobile Premier League, Paytm First Games, Games24X7 and others deactivated their platforms in Karnataka but Dream11 continued to operate.

The Bengaluru Police then filed a first information report (FIR) against Dream11 cofounders Harsh Jain and Bhavit Sheth, based on complaint by Manjunatha, a cab driver, who alleged that the Mumbai firm broke the law by continuing to offer gaming services on its platform a week after the state government notified the new rules.

The police were preparing to issue a notice directing the founders to appear before them and to respond to the charges, we reported on Saturday.

MPL became a unicorn just last month while Dream11 is the largest player in the space, valued at nearly $5 billion.

Company’s response: Dream11 maintains that it is compliant with all laws as Karnataka’s new law does not apply to games of skill, only gambling and betting.

It said on Sunday that the Federation of Indian Fantasy Sports (FIFS) had shared the opinion from a former Supreme Court judge on the matter, who said that the Karnataka Police (Amendment) Act, 2021. did not apply to its member fantasy sports operators.

“This is because the FIFS format of Fantasy Sports has been upheld by the hon’ble courts of India as not amounting to gambling, betting or wagering,” the company added.

“However, following the recent media coverage, our Karnataka users have expressed deep concerns and anxiety on their safety and security. In order to allay our users’ concerns, we have decided to suspend operations in Karnataka. This decision is without prejudice to our rights and contentions under law,” the company said in a statement.

Before pausing its operations in the state, Dream11 had said on Saturday that the complaint was “motivated”, and that it was looking at legal remedies.

Wrong place, wrong time: Karnataka is among three states with the highest number of users of these gaming platforms. The timing of the new law also couldn’t have been much worse for gaming firms, which were gearing up for huge marketing campaigns to attract new users during the ongoing IPL and upcoming T20 World Cup that starts later this month.

‘Big win’: But Karnataka’s Home Minister Araga Jnanendra termed the first case filed under the new law a “big win” for the government. He said many online game operators have blocked access to their platforms in Karnataka since the law was notified last week. He said while the government has only banned games of chance, not games of skill, “one cannot allow betting and wagering even on games of skill”, said.


After protests, Urban Company says it will work to increase partners’ earnings

Urban Company

Urban Company founders Varun Khaitan, Rahav Chandra and Abhiraj Bhal

Urban Company became embroiled in a controversy over the weekend, after more than a hundred women beauticians protested outside its office in Gurugram on Saturday against alleged unfair work practices and logged off the app on Sunday as a mark of protest. Many others resigerest their protest on social media.

Several beauty ‘partners’ of Urban Company said they would not take orders from customers to protest alleged high commissions and poor working conditions, including late-night shifts.

Swift response: In a blogpost on Sunday, the company said it would announce important programmes to increase earnings of partners in the coming weeks, and publish an update to the blogpost at the end of October with the revised data. It added that it was “not perfect” and may have made mistakes on its journey.

Between the lines: Home-based salons is the company’s single largest business vertical. The beauty and wellness segment contributed 55% of its revenues in FY20, according to its annual earnings report. The controversy also comes on the eve of the festive season, when beauty services are in high demand.

Claims, counters: In one of the videos of the protests that went viral, a beautician alleged that Urban Company charges them a commission of more than 30%. Another video showed a screenshot that said the company would “take strict police action against anyone who stops other partners from going to work”.

But the company said a partner who alleged she made just Rs 67 from four jobs after various company deductions had misrepresented the facts.

“The partner accepted cash payments for two orders and online payment for the remaining two. Her net earnings after commissions and other fees for the four orders was Rs 1,941,” the company said. In a separate tweet on the issue, Urban Company said, “…after removing travel and product costs, she made Rs 1,141 for the four jobs.”


The company said in its blogpost that its partners have average net earnings of Rs 280-300 an hour, and that the top quartile earn up to Rs 36,000 a month after all deductions. It said service partners have access to life and accident insurance and that during the pandemic it gave Rs 10 crore in interest-free loans to beauty partners in locked-down regions.

Solidarity: Earlier on Sunday, the Indian Federation of App-based Transport Workers (IFAT), which represents app-based transport and delivery workers, said it “stands in solidarity with the women workers of UC protesting against the exploitative practices” of Urban Company. Last month, IFAT had filed a public interest litigation in the Supreme Court, seeking social security for gig workers.

Tweet of the day


Ecommerce festive battle sees Shradh twist in sales

ecommerce

A week into their flagship sales, ecommerce players have recorded higher sales than last year but still lower than what they were expecting, according to industry executives, analysts and logistics experts we spoke with.

Predictions: Market research firm Forrester had said that ecommerce companies would record around $9.2 billion in gross merchandise value (GMV) in the festive month, including around $6.5 billion in the first week alone. RedSeer Consulting had also predicted a GMV of $9 billion for the festive month (October3 to November 3).

GMV in ecommerce refers to the total value of sales on a platform during a given period, including discounts but excluding returns.

But why? Sources told us the first-week GMV may have been lower than expected because last-minute changes to the sale dates meant they started during ‘Shradh’, considered an auspicious time for making purchases. But the companies could still make up for this in the next two sale events before Diwali, which could take daily shipment volumes to around nine million from around six million last year, industry players told us.

Intense rivalry: We had reported last month how Walmart-owned Flipkart and Amazon India made back-to-back changes to their sale dates over a weekend so they didn’t concede any advantage to the other. We also reported that the global chip shortage issue had spilled over into segments such as smartphones, large-screen TVs and laptops, affecting their supply.


Investors line up for cloud kitchens, online food brands

cloud kitchen

The post-pandemic revival in India’s online food services industry has made Zomato a listed company and drawn millions for Swiggy. Now, cloud kitchens are also getting a piece of that investor action.

Last week, Rebel Foods—the operator of Faasos and Behrouz Biryani—turned unicorn after a $175-million round. Today, we are reporting that its smaller rival has also raised funds. Hygiene BigBite, backed by serial entrepreneur K Ganesh, has raised $15 million from Falcon Edge, two people familiar with the development told us.

  • The firm is part of Ganesh’s entrepreneurship platform called GrowthStory. He was an early promoter of startups like BigBasket and home decor provider Homelane.

Pivot: Founded in 2016 by Prasad as B2B delivery startup BikeNinja, the company pivoted to a multi-brand cloud kitchen model in 2017. It currently operates 10 brands, including Gunpowder and Biryani Trip, across 50 kitchens. It is finalising at least one acquisition, Prasad said, and planning to add five more brands in the near future.

Cloud kitchens, explained: Cloud kitchens are facilities set up for making delivery-only meals. As restaurant dining took a severe hit amid the pandemic, the cloud-kitchen industry received a major boost. Over the last 18 months, all major brick-and-mortar chains have expanded their cloud kitchen networks, we reported in August.

The growth is such that experts believe that cloud kitchens could outpace the growth of physical outlets in the next 12 months, despite the return of dining in.

Online food: The online penetration of food services in India is set to double by 2025 clocking a GMV of nearly $13 billion, RedSeer Consulting said in a report dated August 30.

online food

“Although the pandemic hit the market, it also accelerated the pace of online adoption,” RedSeer’s Rohan Agarwal and Abhijeet Routray said in the report. “Similar to many other markets, this market is also seeing a rising online growth, especially post pandemic.”

Still, India’s online food industry has a long way to go. The market is underpenetrated when compared to the US and China, as the chart below shows.

Online food services- India vs US vs China

Women take charge at Indian EV firms

As India’s electric vehicle industry gains momentum, it has set the ball rolling for women in leadership roles. That’s the growing trend across EV companies in the private, public and startup domains, say experts.

Who are they?

  • Sulajja Firodia Motwani, chief executive of Kinetic Green
  • Mahua Acharya, CEO of Convergence Energy Solutions
  • Rashmi Urdhwareshe, EV policymaker with govt bodies
  • Suman Mishra, CEO of Mahindra Electric
  • Prabhjot Kaur, founder of Esmito
  • Prerana Chaturvedi, founder of Evolet

Tech-driven shift: Increasing digitalisation and newer futuristic EV technologies are making it easier for women to dive into this space, said Kaur. Legacy-wise, there were fewer women in the conventional engine technology space. “I see a natural push and a creative tendency for more women to get in the EV ecosystem,” said Kaur.

Infographic Insight

Global venture funding

Starting up, teens are tapping Twitter

Teen Twitter story

When 17-year-old Viraj Chhajed from Aurangabad started tweeting about building his SaaS startup called Basch, which helps people create AI-generated videos, he did not anticipate an offer that valued it at about $1 million in the beta phase. Nor did he expect John Maloney, the former president of Tumblr, to reach out to him on direct messages to learn more about the spirited young founder.

Despite all this, Chhajed and his three teen cofounders, whom he also met on Twitter, have chosen to stay bootstrapped. His thread detailing why he did not accept the fundraising offer was liked 1,500 times and retweeted over 200 times.

Many teenagers like Chhajed are tapping into #StartupTwitter to build products, access founders and venture capitalists, and scout for freelance gigs in India’s booming startup ecosystem.

They are eager to learn and share — their timelines are filled with threads on growth and productivity hacks, and they tweet on non-fungible tokens and financial literacy. The public display of their knowledge and curiosity is catching attention. (read more)


Other Top Stories We Are Covering

FAANG may restructure operations after OECD’s tax deal: Tech multinationals such as Google, Facebook, Amazon and Apple might tweak company structures or even create new units in a move that could impact future tax collections in emerging economies like India when the global tax deal announced by OECD comes into effect.

Also Read: Equalisation levy on Facebook, Amazon, Google may go only in 2-3 years

TCS to bid for Air India digitisation project: Tata Consultancy Services will leverage its expertise in working with several global airlines — such as Singapore Airlines and British Airways — to bid for digitisation projects of national carrier Air India from its parent Tata Sons, COO N Ganapathy Subramaniam told ET.

‘No Made-in-China Teslas for India’: Road Transport Minister Nitin Gadkari said he has asked Tesla Inc. to avoid selling China-made cars in India ahead of the electric-vehicle maker’s expected entry into the country.


Global Picks We Are Reading

■ Facebook should stop pretending it has such high standards (Bloomberg)
■ Lawmakers See Path to Rein In Tech, but It Isn’t Smooth (NYT)
■ Apple Veteran’s Next Act Is Taking Home-Delivery Startup Public (WSJ)

Today’s ETtech Morning Dispatch was curated by Tushar Deep Singh and Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.

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