1 important thing: Twitter has finally heeded to countless requests from its users over the years and started testing an edit button, perhaps making its biggest feature addition in several years. The social media firm however continues to face troubles from the Indian government. More on it below...

In today's newsletter:

• Twitter vs Govt: No holds barred
• Reality check for Indian Web3 founders
• Amazon struggles in India

After a brief period with a semblance of lull, the legal drama unfolding between Twitter and the Indian government reached a new high today.

The government accused the social media platform of having submitted incorrect evidence as part of its petition, and requested the Karnataka High Court to dismiss it .

• Twitter had earlier sought relief from 39 blocking orders issued under Sec 69A of the IT Act, saying that several of the blocking orders had content of politicians and journalists, and thus complying to such will be violation of Freedom of Speech of users on the platform.

The government however said that Twitter cannot seek to defend Article 19, 14 and 21 of the Constitution being a foreign registered company. It can only be done by 'citizens of India' or 'natural persons'.

• Foreign intermediaries can also not be arbiters of free speech, the government said.

In its affidavit, the government however said that the evidence submitted by Twitter to the court did not match the explanation that the government had provided when those blocking orders were issued.

• Twitter had argued in its petition that the government did not provide enough explanation while seeking compliance to Sec 69A of the IT Act and removing content based on those orders.

Apart from seeking dismissal of the petition, the government indicated that Twitter's safe harbour immunity under Sec 79(1) of the IT Act 2000 should be removed owing to non-compliance to government orders.

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The fear of missing out (FOMO) factor which led many entrepreneurs to start up in Web3 and venture capitalists to invest in these firms last year, is now behind us.

The funding winter coupled with the crypto has forced the industry to relook at the real world solutions that Web3 products can provide and remain much more rooted to the centralised world – compliance, unit economics et al.

Entrepreneurs who were starting up are now pivoting plans, delaying token launches and fundraises. While last year, the burgeoning sector raised $0.5 billion, in the first six months of this year, the sector raised only a little over $1 billion.

• Hemant Mohapatra, partner at Lightspeed India says that growth stage deals are much tougher now and deal flow is down by 30 percent as compared to last year in the Indian Web3 space.

The magic phase where you could just do something because it is new and interesting is over for Web3 founders. While on one hand, the funding winter did not stop large venture firms from raising mega funds to invest in Web3, cheques are going out only after intense scrutiny.

• The concerns from investors are now more on compliance and products that can solve real-life problems. In fact, this sector has drawn this criticism periodically.

What's more, 2022 has shown that Web3 is not ready even with the basic tools needed for the space to function and flourish, say industry experts.

Experts however say that interest in crypto or Web3 is far from dead. CoinDCX founders recently told us that they have 25,000 applications in the pipeline and plan to hire 1,000 people this year.

Founders who are starting up in the space claim they are flooded with resumes. The space continues to remain attractive to young talent, former Coinswitch Kuber executive Sharan Nair who is now building a Web3 venture PYOR Edge tells us.

"There is a difference when you are working in Web3, suddenly you are part of a community, you're changing your DP with light in your eyes. You are speaking a different lingo on Twitter. You can see a change in personality when people move from Web2 to Web3." he says.

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Even after making investments of $6.5 billion in India through the last eight years, profitability remains elusive for the e-commerce major in India.

According to a report by brokerage firm Bernstein, its growth in the country has come at a high cost: Amazon's earnings before interest, taxation, depreciation and amortisation (EBITDA) lies in the range of negative (-) 5 percent to 10 percent.

The company also faces multiple challenges in the country:

• Immense competitive pressure in fast growing categories like smartphones and apparel
• A weaker value proposition in 'new' commerce areas like social commerce and quick commerce
• Limited traction in tier 2/3 cities
• An unfavorable regulatory environment for foreign retailers.

Bernstein estimated that Walmart-owned Flipkart leads the Indian e-commerce market at present with annual sales of $23 billion in 2021.

• Amazon is the second-biggest player with $18-20 billion of gross merchandise value (GMV) last year and Reliance comes next with e-commerce sales of around $4.6 billion.

• It is also falling behind on user engagement metrics like downloads and daily active users while Meesho is leading the charge on this front.

• In fashion, Flipkart (including Myntra) is estimated to be the dominant player with around 60 percent market share while Amazon has around 25-30 percent.

• Smartphones have been the fastest growing but lower margin category for Amazon which is estimated to have a leading 45 percent market share in the category.

The brokerage expects the e-commerce market in India to grow at an annual rate of 30 percent to reach $130 billion by 2025.

• The total addressable market is expanding with new opportunities in social commerce and quick commerce leading the charge.

The number of internet users in India is expected to grow to 1 billion by 2025 with 33 percent of them (330 million) becoming online shoppers.

• Troubled crypto lending platform Vauld has reached out to its customers seeking their interest to be a part of a proposed Committee of Creditors (CoC), to whom it owes money.

• Crypto.com has reportedly pulled out of a massive sponsorship deal with the European Champions League (UEFA) at the "last moment" earlier this summer.

• An Australian woman whose bank account was accidentally credited with about AUD $10.5 million instead of an AUD $100 refund has been ordered by a court to return the amount to Singapore-based cryptocurrency exchange Crypto.com.

Logistics startup Shiprocket has had a tumultuous journey so far: multiple pivots to a near sale and then a seemingly endless wait to enter the $1 billion valuation club, which ended last month.

In the latest episode of our show Bits to Billions, the founders spoke about its tale of pivots before finding a compelling product market fit, raising funds amid a funding winter, and its global ambitions.

Watch the episode