Breaking: Info Edge approaches Delhi HC after not getting any details from Rahul Yadav’s 4B Networks despite a forensic audit. Both to go into arbitration. 

One important thing: Qatar Investment Authority is reportedly considering a $1 billion stake in Reliance Retail*. The deal is pegged at $100 billion valuation, as per Financial Times.

*Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

In today’s newsletter:

• Gaming studios distance themselves from real-money gaming
• Govt cracks down on illegal maps on apps
• Toughest quarter in 5 years: TechM CEO Gurnani

Was this newsletter forwarded to you? You can sign up for Tech3 here

The GST Council's recommendation to levy a 28% tax on real-money gaming has caused a stir in the burgeoning industry.

• Even as skill-based gaming platforms and their investors are urging for a more favourable regime, video gaming firms are facing the consequences of the widespread confusion surrounding this measure

Over 45 Indian gaming studios have written to the Prime Minister's Office, the Ministry of Electronics and Information Technology, and the Ministry of Information and Broadcasting, requesting that video games and real-money games be distinguished in India, as is done across the world.

• In the letter, the companies have asked for video games to be categorised as separate entities from real-money games and fantasy sports

The 28% GST doesn't apply to video games, as they do not involve a staking or a wagering element. Instead, they are taxed at a rate of 18% GST, which is already included in the app sales on Google Play Store and Apple App Store.

However, in India, video games are consolidated with real-money games under the same "online games" umbrella. This is unlike other markets, where games involving wagering are categorised as iGaming, regardless of whether they are based on skill or chance. 

• Many perceive this as a signal that Indian authorities apply blanket regulations to both industries

This has resulted in international game corporations, publishers, and investors becoming wary of investing in Indian video game companies, exploring co-productions, or forming strategic partnerships. More on that here

Meanwhile, real-money gaming companies are eagerly awaiting the GST Council meeting on August 2, where they hope to get clarity on the tax treatment for the sector and the rules that will be implemented. 

• While a rollback of the 28% tax is unlikely, the meeting is expected to resolve the issue of whether the tax should be levied on the entry value or each bet

While the Indian Army guards the country's physical borders, the responsibility of maintaining them on digital platforms such as apps, websites, and other platforms has fallen on the Ministry of Electronics and Information Technology (MeitY) and the Survey of India (SoI).

SoI, based on an alert from MeitY, sent a notice to Google about a popular game on the Play Store that had an incorrect map of India.

• The app, World Map Quiz, developed by Qbis Studio and with over 5 million downloads, had an incorrect map of the Union Territories of Jammu and Kashmir and Ladakh

The incorrect map showed the Line of Actual Control (LAC) and Line of Control (LoC) on the map of J&K and Ladakh.

• Since receiving the notice, Qbis Studio has corrected the map

Clauses under India's Information Technology Act and the IT Rules prohibit publishers of content, such as Google, Twitter, or other social media companies, from hosting any content that is illegal.

• In the notice, SoI warned Google that depicting an incorrect map was an offence under the Criminal Law Amendment Act of 1990

Find out more

Tech Mahindra's Q1 numbers missed all estimates, and the company performed worse than its peers in a quarter that has been a washout for large IT companies.

• CEO and MD CP Gurnani even called it the company's toughest quarter in the last 5 years.

This was primarily due to a 9.4% QoQ decline in the company’s communications, media and entertainment (CME) vertical.

• CME accounts for nearly 40% of the company’s revenue

The company missed average estimates on all counts, including revenue growth, profitability, and EBIT margins.

• Net profit was down by over 38% on both QoQ and YoY basis
  
  
• Revenue growth decreased by 4.1% QoQ
  
  
• The worst hit was its margins, which dropped to 6.8% from 11.2% last quarter
  
  
• While the attrition rate came down, net headcount addition was down by 4,103 in Q1

Gurnani is set to retire on December 19, passing the baton to CEO designate Mohit Joshi, who already joined as a senior board member on June 19.

• Joshi, an Infosys veteran, comes with expertise in winning large deals, heading the BFSI and healthcare segments

• Gurnani said that the company now wants to increase revenue contribution from BFSI, healthcare, and other non-CME verticals under Joshi’s leadership

• He, however, maintains that networks, generative AI, 5G, and cloud will continue to be the company’s strong points

Go deeper

Swiggy has taken the co-branded credit card battle to Amazon and Flipkart. The food and grocery delivery app is offering 10% cashback on its own platform, and 5% cashback on card spends on Amazon and Flipkart. 

This is the same cashback offered by the e-commerce giants for shopping on their platforms with their own co-branded credit cards. In one fell swoop, Swiggy could make both the co-branded credit cards irrelevant. However, there is a catch.

• The cashbacks are credited as Swiggy Money, and can only be used on its platform

As long as you make a sizable grocery purchase every month, this option still makes more sense than its rival offerings.

Find out more

• ChatGPT is now available for Android users in the United States, India, Bangladesh and Brazil.

• Alibaba's cloud computing division has become the first Chinese enterprise to support Meta's open-source AI model Llama.

Looking for a podcast that will entertain you and make you feel smart? Start with "Start with This." 

This podcast by Jeffrey Cranor is an interactive experience: you listen to an episode, then you go and create something from what you've learned. 

Whether you're a writer, a musician, or just someone who enjoys being creative, Start With This is sure to inspire you.

Check it out on Spotify or Apple Podcasts

Note: By subscribing to Tech3 you have already made the right choice. Top it up with a premium offering, the Moneycontrol Pro Panorama, a newsletter that gives you a sharp take on macros, markets, business and finance. Sign up for Pro from this link to get this newsletter in your inbox and also a host of content enjoyed by 500,000+ subscribers.