Author: The New Economy

Uber rivals Didi Chuxing and Taxify form cross-continental partnership

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Chinese taxi-hailing app Didi Chuxing has announced it will invest in European counterpart Taxify in order to create a strategic partnership between the firms, which offer the same service but operate in geographically distinct customer bases. The partnership will strengthen both companies, helping them to compete with rival Uber.

Didi Chuxing revealed the partnership in a statement, but did not specify how much it planned to invest. Taxify founder and CEO Markus Villig said: “DiDi will invest in and collaborate with Taxify to support the latter’s further growth and innovation across its diversified markets.”

As China’s biggest taxi-hailing app, Didi Chuxing boasts a wide consumer base and has access to a substantial level of capital; in April, Didi Chuxing closed a funding round at $5.5bn, making it one of the most valuable technology companies in the world.

Taxify has proved popular with customers due to its comparatively low fares and driver-centric model

The company was formed from a merger between China’s two largest taxi app firms – Didi Dache and Kuaidi Dache – in September 2015. The combined firm later acquired Uber’s Chinese unit in August 2016, and now claims to serve approximately 400 million users in more than 400 cities across China.

Meanwhile, Taxify is headquartered in Estonia and operates in 18 countries across Europe, west Asia and Africa. The app has proved popular with customers due to its comparatively low fares, which Taxify is able to offer by charging drivers a lower commission than rivals; Taxify charges drivers around 15 percent commission, significantly lower than the 25 percent imposed by the likes of Uber.

This driver-centric business model has also served to position Taxify as an ethical alternative for consumers who enjoy the convenience of Uber, but are put off the app by swirling accusations of Uber’s toxic business culture and unfair treatment of drivers.

Researchers attack power grid in order to highlight vulnerabilities

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A study conducted by researchers at New York University, and presented at the Black Hat security conference, has emphasised the vulnerability of the world’s power systems, highlighting the surprisingly meagre cybersecurity of their operating systems.

The researchers underscored the extent to which power systems are vulnerable by providing a “structured methodology towards attacking a power system on a limited budget”. The goal of the report was to challenge the prevailing assumption that only sophisticated attackers would have the know-how to hack into a power system.

In a briefing, the authors of the report said: “It is electrifying what you can find on the internet if you know what to look for. We will demonstrate information obtained from the web that can be leveraged to model and analyse a target power system, and how we can use this information to model power systems throughout the globe.”

In order to illustrate this claim, the researchers uncovered a crucial weakness in several of General Electric’s devices called ‘multilin’ products, which are used to monitor, protect and control power grids. Such devices are widely used in power systems around the world and play a central role in the safety of a grid, as well as providing a reliable provision of power to everyday customers.

The goal of the report was to challenge the prevailing assumption that only sophisticated attackers would have the know-how to hack into a power system

The researchers explained: “Essentially, we completely broke the home brew encryption algorithm used by these protection and management devices to authenticate users and allow privileged operations.”

In the wrong hands, this information could empower an attacker to command a power grid in several crucial ways, enabling them to disconnect entire sections of the grid or damage the system itself.

Critically, remote control devices are playing an increasingly central role in power systems due to their ability to modernise energy distribution. They hold the potential to generate huge efficiency gains by improving visibility of operations, as well as enabling monitoring on a wider scale.

And yet, these ‘smart’ devices are also opening the door to new vulnerabilities; a state of affairs being further exacerbated by the fact passwords tend to be weakly encrypted.

The researchers identified six specific products that were affected by this particular vulnerability, and General Electric has since issued firmware updates to avoid any related issues upon the publication of the research.

The paper also put forward several mitigation strategies to avoid similar issues, including advocating that control devices should be shielded by firewalls, and recommending control system networks remain independent from the public internet.

Mongolia bans grain exports as rising temperatures threaten crop production

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Agricultural officials in Mongolia have suspended all grain exports in anticipation of a dire shortfall in the autumn harvest, after scorching June temperatures left almost a third of the country’s farmland suffering from severe drought.

In June, Mongolia’s temperatures climbed to their highest level in 56 years, threatening crop production and potentially triggering a devastating ripple effect on the country’s livestock industry. Despite its blistering summer months, Mongolia suffers extremely harsh winter conditions, with freezing temperatures and heavy snowfall – known locally as the “dzud” – responsible for killing off large portions of the country’s livestock.

A good harvest, therefore, is essential for Mongolian herders to stockpile sufficient stores of grain to keep their animals alive during the winter months. With nearly a third of the population made up of herders, and much of the country’s food supply dependent on their produce, the autumn harvest is crucial to the Mongolian economy.

With nearly a third of the population made up of herders, the autumn harvest is crucial to the Mongolian economy

Mongolia is already struggling financially as a result of the global decline in demand for its primary export materials: copper and coal. Earlier this year, the IMF was forced to agree a $5.5bn bailout for the country as it struggled to meet debt repayment deadlines.

Mongolia had been seeking to expand its agricultural exports in order to protect against fluctuations in the demand for natural resources. However, rising desertification rates have increasingly rendered harvests less reliable, posing a distinct threat to the country’s culture of nomadic herding farmers.

The problems facing Mongolia provide a stark reminder that, despite climate change causing the entire planet to heat, the effects of rising temperatures are not shared evenly. Temperatures in Mongolia have risen by two degrees Celsius over the past 70 years – three times the global average – further demonstrating the worst consequences of climate change are often felt in countries with extreme seasons and those already least equipped to deal with the effects.

 

Amazon makes move into Asia by launching Prime Now service in Singapore

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After months of rumours, Amazon has finally launched its Prime Now service in Singapore, marking its first venture into the South-East Asian market. The mobile app will allow Singaporeans to shop for thousands of items, ranging from fresh produce to electronic goods, and will provide serious competition to Chinese rival Alibaba.

The service, which offers an extraordinary delivery time of just two hours, will give customers access to more than 1,100 products from the company’s own brand, AmazonBasics, as well as a selected range of items from other listed suppliers. The new service will not require customers to pay an additional membership fee for now; instead, the only stipulation is that orders exceed SGD 40 ($29).

According to Tech in Asia, Singaporean business models put a far greater emphasis on machine learning and AI than companies in, say, Europe – a necessity given the incredibly short time frame in which Amazon has to make deliveries. For example, the location of stock will be based upon the frequency an item is ordered, bolstering efficiency within Amazon’s new 100,000sq ft fulfilment centre in the city-state’s Jurong East area.

Amazon Prime Now will not require customers to pay an additional membership fee for now; instead, the only stipulation is that orders exceed SGD 40 ($29)

Given the company’s previous lack of operational presence in the region, Amazon has worked closely with local authorities to make Prime Now’s logistical feat a reality. At present, Amazon will use third-party delivery services to meet demand. However, should the service prove to be popular, Amazon could well adopt a similar approach to the one currently deployed in its US service.

Amazon’s foray into the South-East Asian market has been long anticipated, with fellow e-commerce giant Alibaba dominating the market. The move follows Alibaba’s acquisition of the majority share in Lazada in June, which helped the company secure a strategic foothold in Malaysia, Indonesia, the Philippines, Thailand, Vietnam and Singapore.

With Amazon’s own aggressive expansion strategy now in play, the battle of the e-commerce giants in Asia is in full swing. Whether Amazon’s Singaporean venture is enough to face off Alibaba’s already looming presence in the region, however, would seem – at present, at least – quite unlikely.

UK to ban petrol and diesel cars from 2040

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On July 26, the UK’s Environment Minister, Michael Gove, unveiled plans to ban the sale of new petrol or diesel fuelled vehicles from 2040, with an eventual aim to drive them off the roads altogether by 2050. The announcement follows a similar proposal by France’s environment minister several weeks ago, demonstrating the growing resolve among governments across the developed world to cut carbon emissions.

As part of its manifesto for the recent election, the UK’s ruling Conservative Party had included a pledge to make “almost every car and van” emission free by 2050. However, the plans outlined by Gove go even further: as well as banning all new vehicles – rather than most – Gove said the government plans to make £200m ($260m) available to local authorities to fund schemes minimising the presence of diesel cars on the roads.

The carbon emissions from diesel and petrol vehicles dramatically impact air quality, and the UK Government has been under increasing pressure to reduce air pollution after losing a series of legal actions by campaign groups. In January, air pollution in London surpassed that in Beijing, highlighting the need to shift to cleaner electric vehicles.

Air pollution in London has surpassed that in Beijing, highlighting the need to shift to cleaner electric vehicles

Attempts to design a mass-market electric car have been underway since the early 2000s, but companies have struggled to design cost effective models capable of reaching the high speeds and tackling the long journeys petrol and diesel alternatives can.

Efforts to replace emission-producing vehicles were initially led by Elon Musk’s California-based outfit Tesla, which developed the first highway legal, all-electric car in 2008, and began the production of its first mid-priced electric vehicle this month.

Now, European automotive companies are seeking to gain on Tesla’s head start, investing heavily in electric vehicle production facilities in recent months. In May, Daimler AG, the company behind Mercedes-Benz vehicles, began constructing a €500m ($562m) lithium battery plant in Germany, Europe’s traditional home of automotive production.

Sales of electric cars in the UK grew by 30 percent in the first half of this year, but still account for a tiny percentage of the market as a whole, with only five percent of new registrations electric.

LG invests $13.5bn in OLED screen technology as demand soars

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LG has announced it will invest $13.5bn over the next three years to upgrade its production facilities for organic light-emitting diode (OLED) screens, allowing it to expand output and meet the rising consumer demand for flexible, high definition screens in both TVs and smartphones.

Until recently, OLED screens had been costly to produce, prompting companies to only provide them in top-of-the-range models. However, companies like Samsung and LG have consistently invested in production techniques to streamline the process, bringing costs down in order to take OLED technology to the mass market. Meanwhile, smartphones have also emerged as a growing market for OLED screens, with Apple now named among LG’s customers.

As OLED screens become cheaper, their popularity is set to soar, with OLED displays considered to provide a far greater image quality than LCD or LED counterparts. While previous screen technologies have required a backlight to illuminate images on the screen, OLED screens emit light as the current passes through, yielding a much sharper and vibrant image.

The image quality is improved, in some part, by the ability to display a true black. Backlit TVs, by their very nature, illuminate the whole screen with the same level of brightness whether displaying black or white images – meaning black images are never truly black.

The stark black enabled by an OLED screen results is a very clear image, with areas of white and colour appearing comparatively very vibrant

While manufacturers have attempted to solve the ‘true black’ problem by adding an LED panel behind the screen to apply varying degrees of brightness, the results have often been patchy and out of sync. Meanwhile, OLED screens are perfectly synchronised.

The stark black enabled by an OLED screen results is a very clear image, with areas of white and colour appearing comparatively very vibrant. The screens are also more energy efficient and, since the light source has been stripped out, can be much thinner. OLED screens can even be rendered on flexible plastic, hence the possibility for curved TVs.

A considerable amount of LG’s planned investment is earmarked for domestic use, with the South Korean firm stating it plans to spend $7bn at home by 2019. Plans also include investment in OLED production capacity in China, where the company already owns a panel production plant in Guangzhou.

In a statement, LG said: “The customer base for OLED TVs and signage displays is expanding, alongside rapidly increasing OLED demand from the mobile and automotive markets.”

While Samsung is currently the dominant player in OLED development, LG is a close second. With this investment, LG will be hoping it can maintain its share of the booming market, and possibly take a cut of Samsung’s as well.

 

Ride-hailing app Grab attracts record $2.5bn investment as Uber falters

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On July 24, Uber’s Singapore-based rival Grab announced it expected to raise $2.5bn from its latest round of investment; a figure it claims represents the largest in the history of funding in South-East Asia. The funding will deepen the “strategic partnership” between Grab and its existing shareholders Softbank and Didi. Together, the two firms have put forward $2bn, with Grab confident of raising a further $500m elsewhere.

Since its inception in 2012, Grab has expanded rapidly in South-East Asia, providing significant competition to Uber, which has famously struggled to build a base in the region. Uber recently sold its Chinese assets to Chinese ride-hailing firm Didi, after encountering a number of regulatory and market obstacles.

A key hurdle for US-based Uber has been accumulating the necessary local knowledge to successfully launch its services across South-East Asia. Alan Jiang, former General Manager of Uber Indonesia, has described the South-East Asian market as “unique in that it’s extremely fragmented”.

Grab has expanded rapidly in South-East Asia, providing significant competition to Uber, which has famously struggled to build a base in the region

According to Jiang: “If you want to go big, you need to go international quickly. This means understanding multiple cultures and languages, localising the product, navigating unique political environments, connecting with local business contacts [and] recruiting for a local team.”

Grab currently holds a 95 percent share of South-East Asia’s third-party taxi-hailing market, as well as a 71 percent share of the region’s private vehicle hailing market. The company delivers transport services to 65 cities across Singapore, Indonesia, Philippines, Malaysia, Thailand, Vietnam and Myanmar, providing approximately three million rides per day.

In a company press release, Didi founder and CEO Cheng Wei said: “Starting with transport, Grab is establishing a clear leadership in South-East Asia’s internet economy based on its market position, superior technology and truly local insight.”

This latest influx of funding will be used to solidify Grab’s market position in South-East Asia, as well as bolster investment in its mobile payments platform, GrabPay. The payments platform not only enables customers to pay for rides, but also provides a number of other financial products, which could help the firm tap into new markets that have low levels of engagement with traditional banking systems.

Dark web hit by international crackdown

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An internationally coordinated effort by law enforcement agencies, including the Federal Bureau of Investigation, the US Drug Enforcement Agency (DEA) and the Dutch National Police, has succeeded in shutting two major dark web marketplaces: AlphaBay and Hansa.

Shielded by the secretive infrastructure of the dark web, the sites had been the marketplace for a vast underground criminal economy, in which over 350,000 illicit commodities were bought and sold, including drugs and firearms.

AlphaBay – the largest online criminal marketplace – was created in 2014 after Silk Road was taken down a year earlier. Over the course of three years, the site grew to 10 times the size of Silk Road, facilitating the purchase of a conservatively estimated $1bn in goods.

The crackdown has been described by Europol as “one of the most sophisticated takedown operations ever seen in the fight against criminal activities online”, and has resulted not only in shuttering the two sites but also a number of arrests. The combined authorities’ strategy centred on an elaborate sting operation, which involved covertly taking hold of Hansa for over a month in order to monitor the activity of users and collect strategic intelligence before taking it offline.

New intelligence includes information on several high value targets, as well as the delivery addresses of numerous buyers on the site

In order to maximise the operations disruptive impact, authorities strategically shut down AlphaBay while they were in control of Hansa, anticipating that users displaced from AlphaBay would flock to Hansa in search of a new trading platform. Their plan proved successful, and the closure of AlphaBay triggered an eightfold increase in the number of new Hansa members.

As a result, authorities in the Netherlands have been able to collect a vast amount of intelligence over the course of the past few weeks, which will no doubt lead to a number of criminal investigations. New intelligence includes information on several high value targets, as well as the delivery addresses of numerous buyers on the site. Additionally, the addresses of around 10,000 foreign market buyers were passed to Europol.

Another parallel operation, led by the DEA, saw the creator and administrator of AlphaBay identified and arrested. The suspect is a Canadian citizen who had reportedly been living a “luxurious life” in Thailand. A number of other key figures have also been arrested and millions of dollars of cryptocurrencies seized.

Dimitris Avramopoulos, European Commissioner for Migration, Home Affairs and Citizenship, said: “The dark web is growing into a haven of rampant criminality. This is a threat to our societies and our economies that we can only face together, on a global scale.

“By acting together on a global basis the law enforcement community has sent a clear message that we have the means to identify criminality and strike back, even in areas of the dark web. There are more of these operations to come.”

In a press conference, US Attorney General Jeff Sessions issued a warning to criminals turning to the dark web: “You cannot hide. We will find you, dismantle your organisation and network. And we will prosecute you.”

S&P tech index climbs to record high

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On July 20, the S&P 500 Information Technology Index closed at a record high of 992.29, surpassing its previous peak of 992.29. The result follows a consistent period of growth for the index – which measures the market capitalisation of more than 60 of the US’ largest tech companies – indicating the current swell of investor interest in tech shares is unlikely to break.

The market hit its previous record in March 2000, at the pinnacle of the dotcom bubble. But, just two years later, a dramatic downturn caused the market value of tech companies to tumble by a staggering $5trn, wiping out some established tech players such as Pets.com and Webvan, while taking huge chunks off the value of others, like Cisco.

The mushrooming growth of internet users following the advent of the World Wide Web in 1993 sparked a boom in the number of tech companies, with money flooding into Silicon Valley as giddy investors hoped to cash in on the digital future. However, with a large number of investors having little to no expertise in the area, many funnelled money into companies with no potential profitability, leading to hugely inflated valuations.

Today, social media firms generate a concrete source of revenue from advertising and personal data collection

The landscape of the technology sector is now very different; while some early companies like eBay and Amazon did survive the dotcom bubble, most of the social media companies that define internet usage today were born in the aftermath. These companies have crafted a very different business structure to the early internet model.

Dotcom bubble companies traditionally offered free services in the hope of growing large user bases before introducing a charge. Today’s social media firms, however, still offer a free service, but generate a concrete source of revenue from advertising and personal data collection. While some companies riding the wave of investor speculation are still likely overvalued, there is an underlying potential for profit.

Speaking to Reuters, Phil Blancato, Head of Ladenburg Thalmann Asset Management, expressed confidence this period of mounting investor interest was not endemic of a second internet company crash:  “There is some euphoria around tech, but there are also real earnings.”

London Stock Exchange teams up with IBM for mainstream blockchain trial

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On July 19, the London Stock Exchange Group (LSE) announced plans to integrate blockchain technology into its mainstream financial service transactions. LSE said it would partner with IBM to develop a trading platform that uses the technology behind cryptocurrencies such as Bitcoin to issue shares of small and medium firms on Borsa Italiana, its Italian exchange operator.

Blockchain software creates a record and accompanying timestamp of every transaction performed on a system, creating an unbiased account of how currency has changed hands without the need for a third party overseer.

The software rose to prominence when it was used to solve the problems associated with creating a secure digital currency, enabling the birth of bitcoin. Before the introduction of blockchain, internet-based money systems had no trustworthy way of verifying the true owner of the currency.

The use of blockchain in the birth of the hugely popular bitcoin spawned many copycat cryptocurrencies, and the wider financial services sector is now clambering to see how it can streamline fund-trading processes. A recent examination in the Harvard Business Review suggested implementing blockchain would totally overhaul the financial services sector in a manner comparable to the seismic impact the internet had on the media industry.

Before the introduction of blockchain, internet-based money systems had no trustworthy way of verifying
the true owner of the currency

Traditionally, smaller platforms have entered information regarding trade deals into spreadsheets, or even paper files, with both parties keeping a separate record of the transaction. This old fashioned system is riddled with problems and is in dire need of an overhaul; one key issue is the unnecessary expense of extra man-hours spent recording trade deals on a daily basis. Another is the obvious opportunity for human error when entering the records.

As well as doing away with the out-dated manual record system, blockchain will make it easier for companies to share and track trade histories via the digital record it creates. This adds a much needed – and previously impossible – level of transparency for shareholders.

Raffaele Jerusalmi, CEO of Borsa Italiana, believes if LSE’s implementation is successful, the wider adoption of the technology across the financial services sector is inevitable. Jerusalmi said: “Through our work with IBM on this blockchain solution, Borsa Italiana is taking the lead in transforming the way European SMEs can manage their shareholder data and at the same time expand credit access – all on a trusted digital platform.”

Flipkart raises Snapdeal offer amid increasing competition

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Indian e-commerce firm Flipkart has offered between $900m and $950m for smaller rival Snapdeal, a marked increase on its opening bid range of $800m to $850m. As reported by Reuters, the Snapdeal board is currently reviewing the new proposal.

The deal is critical to Flipkart’s ambitions to retain its dominant position within India’s booming e-commerce market. The market, which has been spurred by the country’s growing number of internet users, has become an increasingly lucrative business venture in recent years.

According to the latest Internet Trends Report – published by Silicon Valley-based venture capital firm Kleiner Perkins Caufield Byers – the number of internet users in India grew by a staggering 40 percent last year, rising to around 355 million.

Increased competition from foreign firms – most notably Amazon – has led Flipkart to look elsewhere in order to consolidate its position in the market

While this rise has historically represented a significant boon to Flipkart’s business model, increased competition from foreign firms – most notably Amazon, who recently acquired permission to sell groceries in India – has led the company to look elsewhere in order to consolidate its position in the market.

The Internet Trends Report suggested that, despite Flipkart’s current dominance, Amazon is likely to capture the lion’s share of the market in the long term. Buoyed by the growing number of internet users, Amazon reported an 85 percent increase in Indian sales year-on-year, marking a significantly faster growth than its Indian competitors.

Snapdeal’s largest shareholder, Japan’s Softbank Group, hopes to limit Amazon’s slice of the Indian e-commerce market, and is said to support Flipkart’s plans to grow through acquisition.

Meanwhile, Snapdeal has also garnered interest from another Indian e-commerce firm, Infibeam, and is set to consider both proposals in the coming days. Snapdeal is expected to reach a decision within the next 10 days.

How much does a cyberattack cost?

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A report co-written by Lloyds of London and risk-modeling firm Cyence has sought to identify just how vulnerable the global economy is to cyberattacks. The report comes shortly after the NotPetya disaster, which saw a cyber-virus spread to businesses in more than 100 countries around the world.

According to Cyence: “The insurance industry requires an economic model around cyber-risk, which not only addresses the question on frequency (probability), but also answers questions on severity (how bad is the event going to be?), financial loss (how much is it going to cost?), and recurrence (if a company had an event, what is their probability of having a follow-on event?).”

The report underscored the mounting threat cyberattacks pose to both businesses and governments. In particular, it modeled a hypothetical hack of a cloud services provider. According to the report, such an attack would result in economic losses ranging from $4.6bn to $53bn. And, in the most extreme cases, losses could rise to as much as $121bn. At the higher end, such losses would be on par with those inflicted by some of the most extreme natural disasters, such as hurricanes Katrina and Sandy.

In the most extreme cases, a cyberattack could see losses rise to as much as $121bn

As reported by The Guardian, Lloyds Chief Executive Inga Beale said: “This report gives a real sense of the scale of damage a cyberattack could cause the global economy. Just like some of the worst natural catastrophes, cyber-events can cause a severe impact on businesses and economies, trigger multiple claims and dramatically increase insurers’ claims costs… underwriters need to consider cyber-cover in this way and ensure that premium calculations keep pace with the cyberthreat reality.”

Talking of the challenges cyber-risk modeling presents, Cyence said: “The world’s companies are increasingly realising that cybersecurity is not just a technical problem but a business risk. It has to be managed like other business risk, not only through a combination of risk prevention and mitigation (technology products and services), but also through risk transfer (insurance).”

The cyber-insurance industry struggles to model risk due to a lack of historical data, as well as the human element behind most attacks. Despite such complications, the industry is quickly growing: according to insurance broker Marsh, the cyber-insurance industry is currently worth over $3bn, and is expected to double in the next few years.