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1. Apple & Samsung shift manufacturing to India, encouraged by a $6.6B incentive scheme
  • Approved companies include Samsung, the 3 contract manufacturers who assemble Apple’s iPhone (Foxconn Hon Hai, Pegatron, and Wistron), and Foxconn affiliate Rising Star (at one point, the largest contract manufacturer in India). Apple and Samsung together represent 60% of global mobile-phone sales, with Apple accounting for 38% and Samsung for 22%. Also approved by the Indian Ministry were 5 domestic mobile-phone players (e.g. Micromax, Lava), and 6 components manufacturers.
  • The Indian government expects the approved applicants to drive a collective $143B in production and 200,000+ direct jobs (and nearly 3X that in indirect employment) over 5 years. 60% of the production is expected to be exported, supporting India’s ambition to become an export hub.
  • India has been working to transform itself into a globally competitive manufacturing powerhouse for both domestic and exported goods. These incentives directly support India’s stated goals of manufacturing $133B in smartphones and related components by 2025. India passed the US in 2019 to become the 2nd-largest and one of the fastest-growing smartphone markets in the world, with 500M+ smartphone users and 158M smartphones shipped. It continues to track towards Prime Minister Narenda Modi’s vision of “a self-reliant India,” though Chinese vendors still command nearly 80% of India’s smartphone market.
  • For the 3 contract manufacturers making Apple iPhones, this continues a shift that began a few years ago. As China’s labor costs have grown, India has become more attractive for its booming domestic electronics market and combination of low wages, improving infrastructure, and reasonably stable political environment. Wistron began producing older iPhone models in Bengaluru in 2017 – the first time iPhones had ever been assembled in India – adding another plant nearby earlier this year. Foxconn, which followed Wistron in 2019, will begin producing the iPhone 11 at its Chennai plant this year – the first time current iPhone models have been produced in India. It is planning a $1B factory expansion. Pegatron, in turn, is in the process of establishing an Indian subsidiary.
  • Samsung once led the Indian market in smartphone shipments, though it has since fallen to 3rd place (with 17% market share) behind Chinese firms Vivo and Xiaomi. Samsung has manufactured in India for over two decades, making up to 90% of the phones it sells within India in local factories. In 2018, it opened up what was reported to be the world’s largest mobile-phone factory in India, and then closed its last Chinese factory in Oct 2019. Samsung plans to transition some manufacturing from Vietnam (where it currently makes half of its phones) to India, submitting estimates to the Indian Ministry of $40B in production shifted over 5 years.
  • Escalating global trade tensions are accelerating the diversification of global supply chains away from China. The risks of overreliance on China have become more apparent over the past couple years. The market environment in China has become less attractive, with rising factory wages and taxes, local competitors, a less accommodating government, concerns about IP and long-term competitiveness, and of course trade wars and national bans. As global companies recognize the importance of not putting all their eggs in one basket, India is emerging as one of the winners.
Related Briefs:
  • Jun 5 2020 (3 Shifts): India, seeking self-reliance, lures electronics manufacturers with $6.6B in incentives
  • Apr 4 2020: Global supply chains diversify away from China
2. Google’s $1B program will pay news publishers directly
  • Google recently announced it will invest $1B over 3 years to license content from partner publishers for its Google News Showcase product. The Google News Showcase, which just launched in Brazil and Germany, has “panels” that prominently feature partner publishers’ brands and content. The Showcase is expected to be rolled out across Google platforms, including Google News apps for Android and iOS, the Google Discover feed (within the Google search apps and Google.com mobile site), and Google Search.
  • Partner publishers can curate and package their content using built-in features, such as timelines of events, key bullets, and related articles. Panels will also eventually include video, audio, and daily briefings. Google has signed deals with almost 200 publications in Germany and Brazil as well as Argentina, Canada, the UK, and Australia – which are presumably on the list for upcoming rollout. Google also intends to add India, Belgium, and the Netherlands.
  • The announcement comes during a period of intense regulatory scrutiny around Google’s use of publisher content. Australia, for instance, recently drafted regulation requiring Google and Facebook to negotiate with Australian publishers for their content. (Australia was originally the 3rd launch market for Google News Showcase but was postponed due to regulatory uncertainty, putting a pause on partnerships with 5 local publishers.) A French court this week also denied Google’s appeal of an order requiring it to negotiate with publishers to use content snippets. Google is reportedly nearing a deal with an alliance of French publishers.
  • Big tech firms used to rely on the volume of traffic they could drive to publishers for negotiating leverage. Lately, however, large publishers have gained power, backed by public criticism and regulatory scrutiny. This has been reinforced during the pandemic, as news organizations have struggled and big tech firms have flourished. Google is not the only tech player moving towards direct payments – Facebook as of late 2019 is also paying news publishers for inclusion in its products. News Corp, one of the biggest critics of big tech, has reportedly struck paid deals with Facebook and Apple News, in addition to partnerships with Amazon, Snapchat, Spotify, and Twitter.
  • The coming end of 3rd-party cookies – driven in part by browser players such as Google and Apple – is also helping large publishers gain advantage. One of the clearest effects of the end of 3rd-party cookies is that the owners of large pools of 1st-party data – such as news publishers – will gain leverage and power. Large publishers have lately backed a proposed Global Privacy Standard, which would let consumers broadcast “do not sell or share my data” preferences through their browser – making publishers’ own 1st-party data even more valuable as a result.
Related Briefs:
  • Sep 4 2020 (3 Shifts): Facebook could block news in Australia
  • Nov 9 2019: Facebook News & the current wave of news aggregators
3. Social media tries to encourage more civil conversations
  • With a US presidential election looming and a year defined by a pandemic and social unrest, a new urgency is developing among tech players wrangling with toxic behaviors on their platforms. Several different approaches stand out:
  • Behavioral “nudges” (or comment warnings) before posting
    • LinkedIn, after removing 20K pieces of content in the past 6 months, recently rolled out a system asking users to “keep LinkedIn respectful and professional” when drafting a post, comment or direct message. While most users will see the prompt once (linked to community standards), users with a pattern of inappropriate behavior will see a version every time they draft a new message.
    • Twitter began testing a feature in Jun 2020 that nudges users to read an article before they retweet. Publishers such as Newsweek and AOL have also been using technology from OpenWeb to apply nudges in their comment sections (e.g. “Certain parts of your comment may include inappropriate language. Please revise to take part in the conversation”).
    • Social media firms expect nudges to address the people that are generally well-intentioned and could be influenced by a timely prompt to think twice – not the determined trolls. In a OpenWeb study of 500K comments and 50K users, the effectiveness of nudges was encouraging though mixed – it found 12% of nudged users don’t publish and 34% will edit their comment.
  • Targeting removals of organized activity
    • Conspiracy-theory group QAnon, which has grown in recent months, has been a focus area for social platforms seeking to limit organized misinformation. In Jul 2020, Twitter was the first major platform to target QAnon accounts, banning 7K+ accounts, restricting another 150K, and removing related content from search and recommendations. In Aug 2020, Facebook followed with the removal of 790+ groups, 100 Pages, and 300+ hashtags related to QAnon, and restricting many more (including 10K+ Instagram accounts). It plans to take a proactive stance going forward on takedowns. LinkedIn recently disabled searches for QAnon hashtags and has banned frequent violators of its requirement that posts be “professionally relevant.”
    • Facebook has also been removing accounts, groups and Pages by organized groups linked to nation-state actors such as Russia (200+ accounts and 35 Pages). It also changed its policy to crack down on militia groups and anarchist associations, taking down 6,500+ groups and Pages from 300+ organizations. Twitter has also reported taking down 130+ accounts linked to Iran, which were attempting to disrupt conversation around the presidential debate.
  • Crowdsourced content moderation: After a recent leak, Twitter acknowledged the development of Birdwatch, a tool that reportedly would enable at least some users to flag tweets for moderation and provide context around why they were flagged. These notes would be open to the public, helping educate users on why a tweet is harmful or misleading. (Twitter has experience applying crowdsourced content moderation in its Periscope live-streaming platform.)
  • Controlled private communities: Sep 2020 saw the wider release of a “kinder” social network, Telepath, which embeds content moderation in its core and asks users upfront to agree to ground rules. Telepath is invite-only, requires legal names and phone numbers, and puts limits on the size of its communities. Its aim is to keep discussion focused on well-defined interests, staying “on-topic and tone” and avoiding “circling the drain” in contentious debates. It remains to be seen how effectively the platform can scale and maintain its guardrails.
Related Briefs:
  • Oct 31 2019: TikTok’s rapid rise to 1.5B installs – and the global reaction
  • Oct 15 2019: The advance of deepfakes is spurring new countermeasures
Disclosure: Amazon and Google are vendors of 6Pages.
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