This and more in today’s ETtech Top 5.
Also in this letter:
■ Former Twitter CXOs sue Elon Musk
■ TCS Q4FY23 earnings preview
■ Apple’s Mumbai store to be launched on April 18
Foreign online gaming firms under scanner for tax evasion
The Directorate General of GST Intelligence (DGGI) has cracked down on Cyprus, Mauritius and Cayman Islands-based entities offering online gambling and betting, with some of them said to be posing as fantasy game platforms.
Details: These companies are not registered in India and, initial scrutiny suggests, were helping many high-net-worth individuals (HNIs), including some celebrities and social media influencers, launder money abroad, people aware of the development told us.
So far, tax officials have identified 38 such portals offering services in India but that have not paid any goods and services tax (GST).
Also read | Group of ministers likely to propose 18% GST for games of skill, 28% for chance
The extent of tax evasion is estimated to be around Rs 12,000 crore from April 2019 to November 2022. The tax department has issued notices to these companies and the investigation is ongoing.
‘Distorting the market’: The online gaming market has been an area of concern for both policymakers and the domestic industry, which feels that these offshore-based entities are distorting the market.
“While the domestic industry is largely self-regulated, it still loses a substantial amount of revenue to these overseas players,” said Dibyojyoti Mainak, head of legal and policy at Mobile Premier League (MPL).
Catch-up quick: Minister of State for Finance Pankaj Chaudhary had in December last year said that the Central Board of Indirect Taxes and Customs (CBIC) has initiated investigations against some Indian as well as foreign gaming companies. “The estimated evasion of GST by these companies works out of Rs 22,936 crore, relating to the period April 2019 to November 2022,” he said.
Startups take Google to court over new in-app billing system
A group of Indian startups has asked the Delhi High Court to suspend Google’s new in-app billing fee system until the Competition Commission of India (CCI) investigates the US firm for alleged non-compliance with its directives, reported news agency Reuters.
Filing details: In its April 10 filing, the Alliance of Digital India Foundation (ADIF), a policy think tank, argued that the antitrust body is yet to hear its complaint promptly even as Google’s April 26 implementation date for the User Choice Billing system (UCB) is nearing.
The 744-page filing, seen by Reuters, asks the court to “keep the implementation of Google’s UCB in abeyance” until CCI hears the complaint.
Previous claim: We reported on March 1, citing sources, that Indian startups were exploring various legal options, including approaching the CCI to challenge the UCB, terming it a “violation of the CCI verdict”.
“(The participants) brainstormed at length on the various aspects as a way forward in response to Google’s recent announcement of reducing the fee by just 4%,” ADIF had said. “Despite not using any service from Google, app developers will be forced to pay commissions (11%-26%) to Google. The startup community agreed that Google’s non-compliance will impact the Indian startup ecosystem negatively.”
NCLAT-CCI case: Last month, the National Company Law Appellate Tribunal (NCLAT) upheld the fine of Rs 1,338 crore imposed on the search giant by CCI, saying the competition watchdog’s order did not violate the principles of natural justice.
Ex-CEO Parag Agrawal, two other former executives sue Twitter
Three former Twitter executives — Parag Agrawal, who was CEO; Ned Segal, who was CFO; and Vijaya Gadde, who was head of public policy — have sued the microblogging platform seeking to be reimbursed for costs of litigation, investigations, and congressional inquiries related to their former jobs.
Elon Musk fired the three executives shortly after he took over Twitter in October last year.
Why the case? The court filing outlined numerous expenses related to inquiries by the US Securities and Exchange Commission (SEC) and the Department of Justice (DOJ), but does not include details on the nature of the investigations or whether they are still ongoing.
Agrawal and the two others claim Twitter owes them more than $1 million, and that the firm is legally bound to pay them.
Legal costs: Agrawal and Segal provided testimony to the SEC last year and “have continued to engage with federal authorities,” according to court documents. Gadde, too, was called on to take part in a US congressional hearing about big tech and free speech following Musk’s release late last year of “Twitter Files” related to the site’s content moderation policies.
Also read | A series of chats that possibly sealed the fate of Twitter’s ex-CEO Parag Agrawal
Heavy fine in Germany: Twitter might be in for some trouble in Germany as well, for failing to take down hateful content on the platform, exposing the company to multi-million-euro fines. According to a report in the tech publication Techcrunch, there are about 600 such cases against Twitter, each of which can lead to a fine of up to €50 million.
Earnings preview: TCS Q4 revenue growth to moderate, say brokerages
IT bellwether Tata Consultancy Services (TCS) will kick off the March quarter (Q4) earnings season on Wednesday with investors watching out for the software exporter’s commentary on the growth outlook amid global macro headwinds.
Brokerages’ take: “We expect Q4FY23 revenue growth to moderate to 1% quarter-on-quarter in constant currency terms due to the macroeconomic slowdown leading to delays in revenue conversion and sales cycles,” Jefferies analyst Akshat Agarwal said.
“Though Indian IT services firms do not have meaningful exposure to the affected US regional banks, fears of a banking crisis could impact near-term IT spending by banks and will be the key monitorable during the Q4 management commentary,” Motilal Oswal said.
Q3 earnings: TCS reported 11% on-year growth in net profit for Q3FY23. An ET poll of analysts had expected the Mumbai-headquartered company’s profits to expand by 12.5%. The company also saw a reduction in its total workforce for the first time in ten quarters as it slowed down fresh hiring.
Revenue stood at Rs 58,229 crore, up 19.1% year on year, led by demand for cloud solutions, and surpassing analyst estimates. Meanwhile, net profit stood at Rs 10,846 crore rising from Rs 9,769 crore a year back. On a sequential basis, profit grew 3.9% and revenue was up 5.2%.
Tweet of the day
Apple’s first retail store in Mumbai to open on April 18, Delhi launch on April 20
Apple on Tuesday announced that its first-ever retail store in India will open on April 18 at the Jio World Drive Mall in Mumbai. A second one, at the Select Citywalk Mall in Saket, Delhi, will be launched on April 20.
Quote unquote: “These new retail locations mark a significant expansion in India that will offer great new ways to browse, discover, and buy Apple products with exceptional service and experiences for customers,” Apple said in a press note.
No-go zone for rivals: We had previously reported that the iPhone maker has signed a lease agreement that prohibits nearly two dozen technology, electronics, and ecommerce brands from having any kind of presence near its Mumbai store.
Amazon, Facebook, Google, LG, Microsoft, Sony, Twitter, Bose, Dell, Devialet, Foxconn, Garmin, Hitachi, HP, HTC, IBM, Intel, Lenovo, Nest, Panasonic, and Toshiba are to be kept out of its “exclusive zone”. This will include stores, hoardings, and advertisements.
Tim Cook visit likely: Sources told us earlier that Apple chief executive Tim Cook is likely to visit India for the launch of the Mumbai store.
Cook will also discuss strategic issues such as manufacturing expansion and exports from India with key ministers. If the visit does take place, it could possibly include a meeting with Prime Minister Narendra Modi, sources told us.
Today’s ETtech Top 5 newsletter was curated by Gaurab Dasgupta in New Delhi and Megha Mishra in Mumbai. Graphics and illustrations by Rahul Awasthi.
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