Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The UK competition regulator has paved the way for the £16.5bn domestic merger of Vodafone and CK Hutchison’s Three UK as long as the companies address competition concerns.
The Competition and Markets Authority on Tuesday said the planned tie-up could proceed if the companies committed to delivering on their £11bn plans to upgrade the merged company’s UK network, including the rollout of 5G.
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The CMA’s announcement comes after the regulator said in September that the merger could lead to higher bills for tens of millions of customers and demanded changes if the deal were to go ahead.
The tie-up, first announced in 2023, would reduce the number of operators in the UK from four to three and is expected to create Britain’s largest mobile operator if it gains approval.
The proposed remedies include retaining certain existing mobile tariffs and data plans for three years, as well as pre-agreed prices and contract terms for mobile virtual network operators (MVNOs).
They also require the companies to deliver their joint network plan over the next eight years, which would be a legal obligation overseen by UK communications regulator Ofcom and the CMA.
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The watchdog is seeking feedback on its remedies working paper before a final December 7 decision deadline. The companies in a joint statement said they believed the CMA’s communication provided “a path to final clearance”.
“An appropriate balance appears to have been struck by ensuring that the significant benefits of the merged company’s investments can be realised in full and at pace to the benefit of the country and its citizens, while addressing the CMA’s stated concerns,” the two companies said.
However, they added it was “essential that balance is preserved through to the end of the process, reflecting that the parties have offered extensive remedies, including by making their future network rollout fully enforceable”.
The companies in September offered concessions such as limiting price increases on some phone tariffs for two years and allowing MVNOs with 2.5mn or fewer customers to access its network on pre-agreed terms for three years.
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Margherita Della Valle, Vodafone’s chief executive, said at the time of the CMA’s provisional findings that the companies had volunteered for their £11bn investment plan to be monitored and would be “more than happy” for it to be enforced by Ofcom.
“We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed,” Stuart McIntosh, chair of the CMA’s inquiry group leading the merger investigation, said in a statement.
“Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger,” he added.
Matthew Howett, founder and chief executive of Assembly Research, said the regulator “now seems convinced that the remedies offered will address any competition concerns they had — while also still allowing for the benefits of the merger [to] play out”.
Yun Fong Lim was “thrilled” when the Financial Times told him his academic paper on last-mile delivery had been cited in a patent application by ecommerce company eBay.
“We had several conversations with companies, including DHL, during our research to learn about the issues,” says Lim, professor of operations management at the Lee Kong Chian School of Business in Singapore. “We’re glad to see that our research has some impact.” Lim’s co-authors were his Lee Kong Chian colleague Xin Fang and Qiyuan Deng at the Chinese University of Hong Kong.
Economies of scale
Data supplied by patent search company The Lens shows the top papers cited in patent applications, which serves as one method of measuring the practical value of business school research. Lim and his co-authors’ paper, “Urban consolidation center or peer-to-peer platform? The solution to urban last-mile delivery”, was published in the journal Production and Operations Management.
It concluded that having a central location for deliveries in cities — known as an urban consolidation centre (UCC) — can be better than using a system where individual drivers respond to customer orders (placed on an app), collect the product from the shop/restaurant and deliver it to the customer’s address. This is known as a peer-to-peer system, where delivery costs for carriers are high. This central approach not only saves money but also helps reduce traffic and pollution in the city.
“Last-mile delivery is the most challenging segment of the business process of online retailers, and many ecommerce start-ups cannot survive because their last-mile delivery cost is too high,” explains Lim. “Since the profit margin of last-mile delivery is low, the question is: which business model can make consolidated last-mile deliveries financially and environmentally sustainable?
“That sparked my interest in this area, and knowing that our paper has been cited in a patent application is strong encouragement to work on meaningful research with practical impact. It’s always more rewarding to work on research projects motivated by real settings in industry. It creates more opportunities for us to interact with industry, and means our students are more engaged when we share our research findings in the classroom.”
Social media impact
Among the papers The Lens identified as being cited in two patents is “Does social media accelerate product recalls? Evidence from the pharmaceutical industry”, by Huaxia Rui, professor of computer and information systems at Simon Business School at the University of Rochester, with Yang Gao of Singapore Management University and Wenjing Duan of George Washington University. Published in the journal Information Systems Research, it concludes that, when people discuss problems with medicines on social media, it helps pharma companies recall those medicines faster.
Using a discrete-time survival analysis of US Food and Drug Administration (FDA) drug recall reports, alongside social media data, the study identified two primary mechanisms through which social media influences the recall process: the information effect — how social media enables consumers to report problems quicker than the FDA’s own reporting system — and the publicity effect, where adverse reactions create pressure on pharmaceutical companies and regulatory agencies to act more promptly.
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The authors did not know that their paper had been cited in patents granted, including one from credit card company Capital One. “I’m glad that practitioners find this work inspiring and valuable for their patents, and it proves the impact of our work beyond traditional metrics such as publication and citation by other papers,” says Rui. “I feel there needs to be more dialogue — just imagine all the possibilities if ideas and innovations flowed more smoothly and frequently between academics and practitioners.”
Rui argues that the impact of research is ultimately determined by the intellectual or practical significance of the research questions asked, not where it is published. “It’s natural for us academics to think about publication when we launch a new research project, but this has to be an afterthought,” he says. “I encourage young people to work on big questions and hard problems, which should eventually generate greater impact.”
Supporting innovation by bridging research and patents
The Lens, developed by Cambia, a social enterprise, seeks to change how academic research is linked to industry innovation. “It’s an open platform for discovery and analytics across a corpus of patents and scholarly literature metadata,” says Mark Garlinghouse, business development director. He believes that The Lens is unique in being “open, verifiable and privacy-assured”.
After more than 20 years of development, The Lens holds data on more than 272mn scholarly works, more than 155mn global patents and almost 500mn patent sequences, along with details of the people and institutions that generate this knowledge and the linkages between them, drawn from diverse data sources.
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At the heart of The Lens is a “knowledge graph”, says Garlinghouse: a tool that allows users to connect academic research with patents, shedding light on which studies have paved the way for technological advancements.
By offering tools that enable sharing of search results and analytics, The Lens seeks to facilitate collaboration among researchers, inventors and industries to help drive innovation. “Any single group by themselves is not enough to translate an idea into impact,” Garlinghouse says.
He says many patents in finance, commerce and information technology often cite journal articles by business school academics. Users of The Lens can explore dashboards that visualise these interactions, helping them understand the technological areas where academic research influences industry practices.
Coupon targeting
Coupons for online shopping were the subject of another paper cited twice in patents. Published in Marketing Science, “Dynamic coupon targeting using batch deep reinforcement learning: an application to livestream shopping” is by Xiao Liu, associate professor of marketing at NYU Stern School of Business. Her study found that using advanced computer methods, such as batch deep reinforcement learning (BDRL), to set coupons for online shopping helps businesses earn more money than traditional coupon methods. This new approach allows businesses to adjust discounts based on what each shopper likes and how they have shopped before, making it much more effective.
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Specifically, the BDRL approach outperformed static targeting by nearly twofold and improved gross merchandise value by 63 per cent. Liu’s research addresses the challenges of developing personalised pricing strategies in settings such as livestream shopping — which is used by brands to promote and sell products through livestreams on digital platforms, often in collaboration with influencers. Traditional coupon strategies often fail to capture consumer dynamics and heterogeneity in livestreams. She formulated the coupon-targeting problem as a Markov decision process and used Q-learning, a model-free reinforcement learning method, to optimise coupon allocations based on consumer interactions.
Liu’s paper has been cited in two patents granted to Maplebear, which trades as online delivery company Instacart. “I wasn’t aware of the application, but I gave a research presentation at Instacart, so maybe that’s why they cited my paper,” she suggests.
Another study, published in the journal Operations Research, is cited in a patent focused on ride-sharing services such as Uber, Bolt and Careem. It found that using smart pricing strategies, which change based on location and time, can make ride-sharing services work better and more fairly for drivers and passengers. This approach helps set fair prices for rides, encourages drivers to accept trips and improves overall service reliability. The study has been cited in two patents granted to US ride-share company Lyft.
Authored by Hongyao Ma, Fei Fang and David Parkes of the universities of Columbia, Carnegie Mellon and Harvard, respectively, “Spatio-temporal pricing for ridesharing platforms” concludes that implementing a spatio-temporal pricing (STP) mechanism can significantly enhance the operational efficiency of ride-sharing platforms by addressing the mispricing issues that lead to market failures. This STP mechanism aligns incentives for drivers and ensures that trip prices even out in terms of distance and time, promoting better decision-making.
The mechanism operates as a “subgame-perfect” equilibrium, ensuring drivers are incentivised to accept dispatched trips, rather than engage in strategic behaviour, such as cherry-picking rides.
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“I started thinking about this issue when I read in the news that some drivers are gaming the system,” recalls Ma, who spent time as an intern at Uber. “For example, many drivers would go to a stadium just 10 minutes before the end of a game, and then go offline, so that the price shoots up’’.
“I appreciate having practical impact, changing how people think about a problem, and proposing ideas that can move things forward,” says Ma, whose research also has implications in other queueing systems, such as waiting lists for donor organs.
Borrowing needs
Published in the Journal of Accounting and Economics, “Financial shocks to lenders and the composition of financial covenants” looks at how lenders use accounting information in contracts with borrowers and how their needs influence the terms of these contracts — especially during tough financial times. The paper has been cited in a patent application by Tata Consultancy Services.
Typically, contracts are based on a borrower’s financial health, but this research explores how lenders’ own issues, unrelated to the borrower, affect the contract terms. The researchers examined how lenders react to financial shocks such as corporate defaults and non-corporate delinquencies, and how these events change the types of covenants in debt contracts. They found that, when lenders face financial difficulties, they tend to favour performance-based covenants — which depend on how the borrower performs — over capital-based covenants, which focus on the borrower’s assets.
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Authors Hans Christensen and Valeri Nikolaev of Chicago Booth School of Business, Daniele Macciocchi of Miami Herbert Business School and Arthur Morris of Hong Kong University of Science and Technology discovered two key factors are at play: the capital channel and the learning channel. The former results in lenders tightening contract terms because they have less money to lend, and is seen when non-corporate delinquencies occur. The learning channel results in lenders adjusting terms based on lessons learnt from corporate defaults, using performance pricing to better manage risks.
In short, lenders react to financial shocks by adjusting their contracts to focus more on how the borrower performs, protecting themselves from potential losses. The study suggests that these shifts could influence the borrower’s financial decisions.
Nasdaq-listed software firm Freshworks announced its plans to restructure its operations across all locations, including India and the US, by laying off 13 per cent of its workforce. On Wednesday, the company posted lacklustre third quarterly results, with operating loss widening to USD 38.9 million from USD 38.7 million in the same period a year ago.
Total revenue for the quarter improved 22 per cent to USD 186.6 million, but it did not arrest the loss. In an effort to improve operations, the software-as-a-service (SaaS) company founded by then-Chennai-based Girish Mathrubootham plans to cut around 660 jobs.
According to Freshworks CEO Dennis Woodside, the job cuts are expected to incur costs of around USD 11 million to USD 13 million for the upcoming quarter, which will include severance payments and other expenses.
Layoff season is back
The Salesforce competitor joins accounting big-four KPMG as a major brand to announce layoff this week. Reports on Monday said that KPMG was looking to cut at least 330 jobs, or 4 per cent, of its audit workforce in the US.
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Last week, the maker of the open-source browser, Mozilla Foundation, announced the layoff of 30 per cent of its workforce.
More job cuts circled the tech sector, with Elon Musk’s X laying off an undisclosed number of people, according to The Verge.
Reports in October also revealed that Samsung cut around 10 per cent of the workforce in Southeast Asia and Australia, and TikTok laid off at least 100 people, mostly in Malaysia.
Edutech firm Coursera also cut 10 per cent of its roles. However, last month’s major shocker was aircraft maker Boeing, slashing 10 per cent of its massive workforce, impacting at least 17,000 people.
The layoff trend, which was triggered during the Ukraine war scare, has been in full swing for the past two years. While it showed signs of slowing in the middle of 2024, the latest trends since October paint a gloomy picture for professionals working in the tech sector.
Quantifying ultimate impact is difficult but there is scope to track dissemination externally. This report identifies and analyses a series of alternative ways to measure research that is rigorous but also relevant and resonating with non-academic audiences. Supported by InTent
With majority of business for the Indian IT sector coming in from the US market, there is both concern and joy for the sector because of the US presidential elections result. One thing is sure: the new Donald Trump regime in the US is expected to remain vocal about ‘America First’. Its policies around visa regulations and offshore IT engagements are likely to reflect on the Indian IT services in the short term.
During Trump administration’s first term, Indian IT sector reshaped itself, fostering resilience and adaptability. H-1B visa restrictions led Indian IT companies to pivot to US hiring, creating over 1,75,000 jobs by 2019 and expanding local investments. This shift, though challenging, strengthened the Indian IT sector’s ability to meet client needs onshore, while growing demand for digital transformation in North America provided opportunities for Indian IT firms to lead in modernisation and innovation efforts.
“We may see mixed effects on India’s economy. Stricter visa rules could impact Indian IT professionals in the US, but his push to reduce reliance on China might open doors for Indian industries like tech, pharma, and manufacturing. Meanwhile, the growth of American Global Capability Centers (GCCs) in India is likely to continue, as US companies increasingly invest here for skilled talent and strategic offshore operations,” said Neeti Sharma, CEO, TeamLease.
Of late, the Indian IT industry has been investing significantly on building local delivery capabilities in the US, hiring locals and diversifying its client portfolio by going beyond North America. While the dependence on H-1B is not going to go away, they are better-prepared for the nuanced policy shifts that might take place.
“The good news is that Trump’s new administration is likely to bring in a significant focus on its economy and show changes on the ground. Businesses need cost advantages to remain competitive and talent for deploying the latest technologies. India is extremely well-poised to fulfil these two needs. Hence, I can imagine many more GCCs being set up in India by the US companies to leverage the talent pool available in India and leverage the cost advantages,” said Aditya Narayan Mishra CEO and MD, CIEL HR.
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“Secondly, we expect the CIOs (Chief Information Officers) and the boards of many large and mid-sized companies in the US untie their purse strings to deploy the latest tech and thus, a quick pick-up in new orders for our IT services companies. This shift could drive accelerated development of tech hubs in India, fueling growth in emerging tech fields like artificial intelligence, machine learning, cyber security, and cloud solutions.”
Experts with whom THE WEEK spoke to further pointed out that Trump’s win is expected to strengthen the US economy and the dollar, both of which are very beneficial to the IT industry in India. “The possible tax cuts by Trump for domestic production or services would ease pressure on pricing as well as budgets. H-1B visas and the likelihood of dwindling numbers on that will not hurt the IT services given the wide acceptance of remote delivery and that of GCC growth in India. Hence, Trump’s win is certainly more favourable to India on IT industry or Services,” said Subramanian S., founder, president and CEO of Ascent HR.
Many industry stake holders are also positive about the business intent that Trump is known for, the impact for IT industry, which could be a benign regime, particularly for higher value-added skills. Besides, Trump regime needs India to open up some of the sectors that are not open for trade, and so, India might have to open those sectors as well.
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