"Provide alternative payment method" [Yuri_Arcurs/E+ via GettyImages]
Hey Snackers,
August is behind us (sigh), but we've still got 22 days of summer left. That didn't stop Starbucks from kicking off Pumpkin Spice Latte season early. The PSL drove record fourth quarter sales last year.
Stocks dipped yesterday, but posted gains for the month despite uncertainty around the surging Delta variant.
Doing some Seoul searching... Big Tech. Yesterday, South Korea passed the first law in the world to dent Apple and Google's dominance over app store transactions. Quick refresher: Apple and Google typically take a ~30% cut of in-app purchases, downloads, and subs. Those in-app purchases must flow through Apple/Google's own payment systems. Now…
BRB, going app shopping... Don't sprain a finger. Apple says its current app store policies help protect user safety. But given recent scrutiny, the Fruit halved its 30% fee for developers earning less than $1M/year, and Google said it would only take 15% of developers' first $1M. This South Korean law is the biggest threat so far to their app store dominance — but it's not the first.
Precedent is powerful... This South Korean law and its impact could be referenced by regulators in other countries to curb Apple and Google's dominance. Regulators will be watching to see how South Korea’s law pans out. For example: if it results in more fraud, as Apple has warned. Either way, Apple and Google’s app store payments dominance is no longer absolute.
Potato box delivery... coming in hot. Pinduoduo has surpassed Alibaba — aka: "the Amazon of China" — as China’s most popular ecomm platform by user count. Pindoudou's app connects farmers/distributors with Chinese consumers. The $120B "social ecommerce" platform doesn't really have a US equivalent: shoppers can play games to win prizes, like discounts or boxes of mangoes. Pinduoduo’s sales still trail Alibaba’s, but it’s growing faster — and its stock is up 10% over the past year, while Alibaba’s down 40%.
Mangoes > Louis Vuitton… The ruling Chinese Communist Party (CCP) has increasingly emphasized its goal of achieving “common prosperity” — and alleviating rural poverty. That's partly why it's cracked down on Big Tech this year, from fintech giant Ant Group to video game giant Tencent. Oh, and China fined Alibaba a record $2.8B for "anticompetitive practices." Think: preventing luxury merchants like Louis Vuitton from selling on other platforms.
Beijing rewards compliance... China’s crackdown on Alibaba gave Pinduoduo room to grow. To keep growing, Pinduoduo wants to stay in China’s good graces by giving its profits away to farmers and supporting the government’s plans for agricultural development. Companies in other industries are making similar moves to avoid State restrictions. This month, Tencent, which got rocked by China’s gaming restrictions, pledged $7.7B to “common prosperity” initiatives.
Earnings expected from Chewy, Okta, Asana, Campbell Soup Company, Five Below, and Vera Bradley
Authors of this Snacks own shares of: Apple, Google, Starbucks, and CVS
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