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…

• Not just Apple and Google Pay: South Korea will require the tech giants to allow payment systems from other payment processors and developers.
• That threatens the 30% "App Tax" that Apple/Google collect. If they don't comply, the tech giants could be fined up to 3% of their South Korea revenue.

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.

• Fortnite-maker Epic Games added its own in-app payment system to bypass the "App Tax." Apple and Google responded by expelling Fortnite from their app stores, leading to the ongoing Epic trial saga.
• Last month, a bipartisan group of US Senators proposed legislation similar to South Korea's. In June, a House Committee approved major legislation to curb Big Tech's dominance. Meanwhile, Australia is considering new regulations for Apple/Google Pay.

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.

• Pinduoduo is on China's "better" side: Its agriculture-friendly biz model is better aligned with China's rural prosperity goals. Its quiet social presence and focus on low-income customers has helped it avoid Alibaba-level fines.
• Pinduoduo wants to keep it that way: After turning its first profit last quarter, Pinduoduo announced plans last week to donate $1.5B in profits to Chinese farmers.

• Social: The US says Social Security trust funds will run out of money in 12 years — one year sooner than expected.
• Holmes: The criminal trial of disgraced Theranos founder Elizabeth Holmes kicked off yesterday.
• Stormed: As the US struggles with all kinds of shortages, Hurricane Ida could make the supply chain disaster even worse.
• Ditto: Walgreens said it'll raise wages for hourly workers to $15/hour by November 2022. Earlier this month, CVS said it plans to do the same by July 2022.
• Outsource: Facebook reportedly pays consulting partners like Accenture to sift through the most toxic and disturbing content on its platform.
• Startup: In its filing to go public at an expected $2B valuation, wool sneaker icon Allbirds reported growing sales and widening losses.

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

ID: 1822386