Good afternoon, it's Tuesday! No Monday newsletter this week because I was down with a bad case of food poisoning over the weekend. Lots of big tech news from the US over the weekend- Okta acquiring Auth0, some large Series As and a couple of IPOs and Direct Listings coming soon. On to the news today, OYO loses in arbitration & havoc with commercial SMSes.
➡️ A court-appointed arbitrator has ruled that Oyo Rooms is bound by terms agreed with its rivals Zo Rooms, which require the unicorn to cede up to 7% of its equity to Zo Rooms. Oyo says it will contest the order vigourously.
➡️ This is a fairly old and long story that started with Oyo agreeing to acquire Zo Rooms back in 2015, as evident in SoftBank's earnings presentation in 2016. However in a twist of events, Oyo terminated the agreement later in 2016 claiming that Zo Rooms had no value.
➡️ And as the deal didn't go through, the arbitrator said that Zo Rooms was entitled to claim relief in the form of shares of Oyo Rooms as well as claim cost of its case. The arbitrator did strike down Zo's request for $17M in damages, $1M in payment to the founders of Zo Rooms as well as an alternative settlement of $89M.
➡️ Back when the deal was first announced Oyo was certainly not worth as much as it is today, so I'm curious to see how this further unfolds. As it currently stands, a 7% stake in Oyo (currently valued at ~$9B) is equivalent to $630M which would be one of the largest exits in the ecosystem.
➡️ But given that now Oyo is worth so much, I am sure they will try to continue fighting this in court. I just hope now in the future when larger companies acquire smaller ones, they don't prolong the acquisition and terminate the deal at the last minute- because this isn't the first time we've seen this in the ecosystem.
2. http://bit.ly/3cbmTfa: SMS delivery error rates skyrocket with new regulations
➡️ Today, telecom companies implemented a new set of regulations, which unfortunately impacted commercial messages across the country today. Netbanking, Railway ticket booking, eCommerce, Aadhar authentication & even COWIN registrations were affected.
➡️ According to sources, 40% of the daily 1B messages were undelivered and the error rates at top private and public banks was as high as 25%. And then the blame game ensued with officials at payment companies/banks blaming the telcos for a "faulty implementation" of the new system.
➡️ The telecom operators, on the other hand, called out the lax adoption by the companies sending commercial messages saying they hadn't registered their sender IDs and content templates on the platform- which triggered the errors.
➡️ From the outside looking at this, I think it's hard to pinpoint who is exactly at fault here since it seems like the telecom companies were just doing their job. But this seems like a huge huge issue and I really do it is resolved soon- by either TRAI stepping in and clearing it up, or companies to moving to other means of authentication- OTPs over WhatsApp or Email.
Feedback & ❤️ always appreciated BONUS (Tweet of the day): https://twitter.com/chetanp/status/1368782098144751619
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