FTI Consulting News Bytes – 01 November 2024

FTI Consulting News Bytes

This week we begin with Snapchat CEO, Evan Spiegel, who is under pressure from Wall Street to improve his company’s performance as the business continues to face stiff competition from rival social media firms and share price declines. We then take a look at the EU’s announcement to invest €1.4bn in deep tech research before coming back to British shores for a look at what the budget meant for the UK’s tech scene. Finally, we close out with the impact AI is having on the EU’s decarbonisation goals and how in educational outcomes across the world, women are racing ahead of men. 

This week’s news

Snap out of it

The Financial Times writes that Snapchat CEO Evan Spiegel is facing a battle to convince Wall Street that he can revive his company’s fortunes. The FT reasons that Snap is struggling because it is failing to compete with Meta’s foray into AR, that there have been management missteps alongside a high turnover of senior staff and that Snap’s core advertising business is struggling, leaving investors anxious going into earnings. However, a former senior executive has said that though “there were strategic mistakes”, now “you see the focus going to the right places…There’s potential for a turnaround story. The question will be execution.”

EU to invest €1.4bn to boost deep tech research

The European Union announced its plans to invest €1.4 billion investment in 2025 to boost deep tech research, focusing on competing with tech leaders like the US and China. This funding, from the European Innovation Council (‘EIC’), marks a €200 million increase over 2024 levels. According to Reuters, European politicians have targeted tech and the fast-growing AI sector as one of their key priorities in terms of boosting the region’s sluggish economy. EU Commissioner Iliana Ivanova called the EIC a “gamechanger” for supporting breakthrough innovation across the region.

Autumn Budget 2024 emphasises importance of tech for growth

UK Chancellor Rachel Reeves announced a £40 billion increase in taxes as she promises to rebuild public services. According to Computer Weekly, Reeves has maintained key policies that foster growth in the tech sector, while emphasising the critical role of digital transformation in enhancing efficiency across public sector operations. As part of the budget, the Department for Science, Innovation and Technology (DSIT), will see around a 6.5% increase in its spending over three years, with its budget growing from £12.7bn to £15.1bn in the 2025/26 financial year. In her speech, Reeves said, “Today we are setting a 2% productivity, efficiency and savings target for all departments to meet next year by using technology more effectively and joining up services across government.”

AI boom complicates EU’s decarbonisation goals

It is estimated that AI will drive a 160% growth in demand for data centres by 2030, but it comes at a cost to Europe’s decarbonisation goals. According to CNBC, the AI boom is pressuring European data centre developers to lower water temperatures to handle high-powered chips. Energy efficiency is high on the European Commission’s agenda, as it seeks to reach its goal of reducing energy consumption by 11.7% by 2030; however, Michael Winterson, chair of the European Data Centre Association (EUDCA), warned that lowering water temperatures will eventually “fundamentally drive us back to an unsustainable situation that we were in 25 years ago.”

Who runs the world? Girls!

The Financial Times Chief Data Reporter writes that young women are starting to leave men behind academically. Across the developed world, girls and young women have been pulling ahead of boys and young men in education for several decades. Larger proportions are going on to attend university. Furthermore, it’s put forward that in several rich countries, young women are now more likely to be in work than young men. The UK joined this group of countries in 2020 as the proportion of females in employment versus their male counterparts, widened among 20-24 year olds by 3% percentage points. In the US, the crossover is yet to happen, however, young women’s employment rate deficit has shrunk from almost 10% in 2006 to 1% last year. The article concludes that arresting the decline amongst men is an “essential challenge for the decades ahead” whilst we must be careful not to see these trends as a zero sum game given tackling them “will have positive spillovers well beyond those directly affected.”

Top Tweets of the Week 

• DW News tweets: “BREAKING: Volkswagen intends to shut 3 German factories, its works council says. The move comes as Germany experiences a sluggish economy and automakers deal with high production costs.
• The New York Times tweets: “Jeff Bezos, the billionaire owner of The Washington Post, said on Monday in his first comments that the decision to end presidential endorsements at the paper had been done to improve the newsroom’s credibility, not to protect his own personal interests.”
• Bloomberg tweets: “The world is increasingly driving cars and using phones made in China — despite US efforts to keep China’s tech from getting ahead. What went wrong?”

Number of the week

4 – European carmakers typically spend 4 years developing/designing a new car. Chinese companies do it in a year. (Bloomberg)