Workers inspect smart phone components at the visual inspection area of the surface mount technology workshop inside the Realme factory in Greater Noida, India: Anindito Mukerjee | Bloomberg | Getty Images
Anindito Mukerjee | Bloomberg | Getty Images
India’s booming tech sector has suffered a major blow as startup darlings Byju’s and Paytm plunge into crisis amid regulatory scrutiny and alleged mismanagement.
“There’s been a bit of a reality check for the last couple of years in terms of how to keep corporate governance practices up at a level which is sustainable and at a world class level,” said Karan Mohla, general partner at venture capital firm B Capital Group.
Paytm, once a fintech star in India, has been mired in controversy since March 2022, after the Reserve Bank of India ordered the fintech giant’s banking unit to stop onboarding new customers with immediate effect.
A subsequent audit “revealed persistent non-compliances and continued material supervisory concerns in the bank,” the central bank said on Jan. 31.
Starting from March this year, Paytm was not allowed to continue accepting fresh deposits in its accounts or its digital wallet.
Yet to be profitable, Paytm is also reportedly being probed by the federal anti-fraud agency on possible violations of foreign exchange laws.
On Feb. 26, One97 Communications, the parent company of Paytm, said in an exchange filing that founder and CEO Vijay Shekhar Sharma had resigned from the board of Paytm Payments Bank.
During the pandemic, Paytm capitalized on the digital payments boom in India, reporting a 3.5 times growth in transactions. Investors like SoftBank, Alibaba Group and Ant Financial bet big on Paytm, but its stock price has slumped more than 70% since its IPO in November 2021.
“Venture capital investors and founders have a greater responsibility to make sure that governance in the company is sound,” said Ashish Wadhwani, co-founder and managing partner of IvyCap Ventures.
Byju’s, India’s most valuable startup at one time, is also struggling to survive. The Indian edtech startup has seen its valuation plummet from $22 billion to $1 billion, and faces a series of problems including alleged accounting irregularities and purported mismanagement.
The unprofitable company, which offers services ranging from online tutorials to offline coaching, attracted billions of dollars from investors during the pandemic when traditional classrooms were shuttered.
The company is under scrutiny after the Indian government reportedly ordered an inspection into Byju’s finances and accounting practices, according to Bloomberg on July 11.
“I think that the sector is going to be permanently scarred because of the development with Byju’s, because people are not going to look at that as an isolated problem. They will look at it as a larger edtech viability problem,” said Bhavish Sood, general partner at India-based venture capital firm Modulor Capital and former research director with consulting firm Gartner.
Inflated valuations
The Covid-19 pandemic accelerated the digital revolution in India.
From online education and food delivery to online shopping, tech companies saw a surge in demand for their products and services.
The government recognized more than 14,000 new startups in 2021 — compared to only 733 between 2016 and 2017, according to India’s Economic Survey for 2021-2022.
As a result, India became the third-largest startup ecosystem in the world after the U.S. and China, the survey showed.
In 2021, a record 44 Indian startups achieved unicorn status — valued at $1 billion or more, taking the overall tally of unicorns in India to 83.
Funding for Indian startups plunged 83% in 2023 from the record high $7 billion in 2021, as global venture funding dried up amid rising macroeconomic uncertainties, such as increased interest rates.
Byju’s valuation plummeted 95% after investors cut their stakes in multiple rounds. It was most recently slashed to $1 billion, after BlackRock downsized its holdings in Byju’s last month, according to media reports.
The regulatory crackdown also hit Paytm hard, slashing its valuation to $3 billion as of Mar. 7, according to LSEG data. That’s a sharp decline from the nearly $20 billion valuation when it was listed in November 2021.
“There is no doubt that valuations were very stretched in 2021, early 2022,” said Wadhwani from IvyCap Ventures. “Some companies have done IPOs at valuations which were just not tenable and that caused a lot of stress in the market.”
“Companies which don’t have cash are being forced to do down rounds,” said Wadhwani, referring to funding rounds in which firms raise capital at a lower valuation than a previous round.
“Companies which don’t have a sustainable model are obviously going to go out of business because no one is going to fund them at crazy valuations,” he added.
“But also again, businesses which are run on fundamentals will continue to get funding.”
Packages with the logo of Amazon are transported at a packing station of a redistribution center of Amazon in Horn-Bad Meinberg, western Germany, on Dec. 9, 2024.
Ina Fassbender | Afp | Getty Images
Amazon is considering showing a tariff surcharge on items sold via its site for ultra-low-price items, called Haul, the company confirmed to CNBC.
“The team that runs our ultra low cost Amazon Haul store has considered listing import charges on certain products,” an Amazon spokesperson said in a statement. “This was never a consideration for the main Amazon site and nothing has been implemented on any Amazon properties.”
Punchbowl News reported earlier on Tuesday that Amazon would “soon” begin displaying the cost of tariffs alongside the price of each product, citing a source familiar with the company’s plans.
The report drew the ire of the White House, which called Amazon’s reported plans a “hostile and political act.”
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Qwen3 is Alibaba’s debut into so-called “hybrid reasoning models,” which it says combines traditional LLM capabilities with “advanced, dynamic reasoning.”
Sopa Images | Lightrocket | Getty Images
Alibaba released the next generation of its open-sourced large language models, Qwen3, on Tuesday — and experts are calling it yet another breakthrough in China’s booming open-source artificial intelligence space.
In a blog post, the Chinese tech giant said Qwen3 promises improvements in reasoning, instruction following, tool usage and multilingual tasks, rivaling other top-tier models such as DeepSeek’s R1 in several industry benchmarks.
The LLM series includes eight variations that span a range of architectures and sizes, offering developers flexibility when using Qwen to build AI applications for edge devices like mobile phones.
Qwen3 is also Alibaba’s debut into so-called “hybrid reasoning models,” which it says combines traditional LLM capabilities with “advanced, dynamic reasoning.”
According to Alibaba, such models can seamlessly transition between a “thinking mode” for complex tasks such as coding and a “non-thinking mode” for faster, general-purpose responses.
“Notably, the Qwen3-235B-A22B MoE model significantly lowers deployment costs compared to other state-of-the-art models, reinforcing Alibaba’s commitment to accessible, high-performance AI,” Alibaba said.
The new models are already freely available for individual users on platforms like Hugging Face and GitHub, as well as Alibaba Cloud’s web interface. Qwen3 is also being used to power Alibaba’s AI assistant, Quark.
China’s AI advancement
AI analysts told CNBC that the Qwen3 represents a serious challenge to Alibaba’s counterparts in China, as well as industry leaders in the U.S.
In a statement to CNBC, Wei Sun, principal analyst of artificial intelligence at Counterpoint Research, said the Qwen3 series is a “significant breakthrough—not just for its best-in-class performance” but also for several features that point to the “application potential of the models.”
Those features include Qwen3’s hybrid thinking mode, its multilingual support covering 119 languages and dialects and its open-source availability, Sun added.
Open-source software generally refers to software in which the source code is made freely available on the web for possible modification and redistribution. At the start of this year, DeepSeek’s open-sourced R1 model rocked the AI world and quickly became a catalyst for China’s AI space and open-source model adoption.
“Alibaba’s release of the Qwen 3 series further underscores the strong capabilities of Chinese labs to develop highly competitive, innovative, and open-source models, despite mounting pressure from tightened U.S. export controls,” said Ray Wang, a Washington-based analyst focusing on U.S.-China economic and technology competition.
According to Alibaba, Qwen has already become one of the world’s most widely adopted open-source AI model series, attracting over 300 million downloads worldwide and more than 100,000 derivative models on Hugging Face.
Wang said that this adoption could continue with Qwen3, adding that its performance claims may make it the best open-source model globally — though still behind the world’s most cutting-edge models like OpenAI’s o3 and o4-mini.
Chinese competitors like Baidu have also rushed to release new AI models after the emergence of DeepSeek, including making plans to shift toward a more open-source business model.
Meanwhile, Reuters reported in February that DeepSeek is accelerating the launch of its successor to its R1, citing anonymous sources.
“In the broader context of the U.S.-China AI race, the gap between American and Chinese labs has narrowed—likely to a few months, and some might argue, even to just weeks,” Wang said.
“With the latest release of Qwen 3 and the upcoming launch of DeepSeek’s R2, this gap is unlikely to widen—and may even continue to shrink.”
Uber on Monday informed employees, including some who had been previously approved for remote work, that it will require them to come to the office three days a week, CNBC has learned.
“Even as the external environment remains dynamic, we’re on solid footing, with a clear strategy and big plans,” CEO Dara Khosrowshahi told employees in the memo, which was viewed by CNBC. “As we head into this next chapter, I want to emphasize that ‘good’ is not going to be good enough — we need to be great.”
Khosrowshahi goes on to say employees need to push themselves so the company “can move faster and take smarter risks” and outlined several changes to Uber’s work policy.
Uber in 2022 established Tuesdays and Thursdays as “anchor days” where most employees must spend at least half of their work time in the company’s office. Starting in June, employees will be required in the office Tuesday through Thursday, according to the memo.
That includes some employees who were previously approved to work remotely. The company said it had already informed impacted remote employees.
“After a thorough review of our existing remote approvals, we’re asking many remote employees to come into an office,” Khosrowshahi wrote. “In addition, we’ll hire new remote roles only very sparingly.”
The company also changed its one-month paid sabbatical program, according to the memo. Previously, employees were eligible for the sabbatical after five years at the company. That’s now been raised to eight years, according to the memo.
“This program was created when Uber was a much younger company, and when reaching 5 years of tenure was a rare feat,” Khosrowshahi wrote. “Back then, we were in the office five (sometimes more!) days of a week and hadn’t instituted our Work from Anywhere benefit.”
Khosrowshahi said the changes will help Uber move faster.
“Our collective view as a leadership team is that while remote work has some benefits, being in the office fuels collaboration, sparks creativity, and increases velocity,” Khosrowshahi wrote.
The changes come as more companies in the tech industry cut costs to appease investors after over-hiring during the Covid-19 pandemic. Google recently began demanding that employees who were previously-approved for remote work also return to the office if they want to keep their jobs, CNBC reported last week.
Last year, Khosrowshahi blamed remote work for the loss of its most loyal customers, who would take ride-sharing as their commute to work.
“Going forward, we’re further raising this bar,” Khosrowshahi’s Monday memo said. “After a thorough review of our existing remote approvals, we’re asking many remote employees to come into an office. In addition, we’ll hire new remote roles only very sparingly.”
Uber’s leadership team will monitor attendance “at both team and individual levels to ensure expectations are being met,” Khosrowshahi wrote.
Following the memo, Uber employees immediately swarmed the company’s internal question-and-answer forum, according to correspondence viewed by CNBC. Khosrowshahi said he and Nikki Krishnamurthy, the company’schief people officer, will hold an all-hands meeting on Tuesday to discuss the changes.
Many employees asked leadership to reconsider the sabbatical change, arguing that the company should honor the original eligibility policy.
“This isn’t ‘doing the right thing’ for your employees,” one employee commented.
Uber did not immediately respond to a request for comment.