FTI Consulting News Bytes – 07 July 2023

FTI Consulting News Bytes

Lots happening in the TMT world this week! Ineos’ founder, Sir Jim Ratcliffe, accused the Competition and Markets Authority of being “hostile” towards British businesses. Competition heats up as Meta launched its own version of Twitter – Threads, and China is retaliating against recent export controls from the US, the Netherlands, and Japan. Elsewhere, the British government is in ongoing discussions with large insurers over a pledge which would see British insurers investing billions in startups and infrastructure projects, and digital mental healthcare leader Kooth announced a $188m four-year contract to provide its digital mental health and wellbeing platform to six million 13-25 year olds across California.

This week’s news

Jim Ratcliffe accuses UK regulator of being ‘hostile to business’   

British industrialist, Sir Jim Ratcliffe, has openly criticised the Competition and Markets Authority this week for blocking Ineos’ attempted billion-dollar acquisition of Swiss concrete additives business Sika, reports the Financial Times. Sika produces the concrete admixtures needed for the construction industry. Ratcliffe also criticised wider government policy, citing the North Sea windfall tax and high energy costs contributing to driving business out of the UK. Such dissatisfaction is the latest response of industry leaders to a series of M&A setbacks, with the CMA ruling against Microsoft-Activision and Adobe-Sigma deals.

Threads: the new rival to Twitter?

This week Mark Zuckerberg’s Meta unveiled a new product: Threads. The new microblogging app strongly resembles the text-driven format which Twitter is renowned for. Rollout has been successful; with 10 million people signed up within 12 hours of its launch, reports the Financial Times. The BBC notes the app’s connection to Instagram, giving users the option to “follow all” Instagram followers when signing in. Some say this is setting the app apart from other recent social media platform creations such as Clubhouse and Mastodon, given the nascent app’s guaranteed follower base from the offset, meaning it may outlive its initial hype. Adam Mosseri, Head of Instagram, posted on the app addressing its limitations, citing lack of hashtags and follower feeds as something which will arrive in the future. To this point, Zuckerberg has described Thread’s current iteration as a “current version” so changes should be forthcoming depending on user feedback.

China imposes export curbs on chipmaking metals  

China’s commerce ministry announced curbs on the exportation of chip making materials this week – reportedly a backlash to a series of recent controls by the US, the Netherlands, and Japan. Just days ago, the Dutch government announced limits on the sale of high-end chipmaking equipment overseas, whilst the US is currently in the midst of introducing export limits on AI chips produced by Nvidia and AMD. The materials in question are gallium and germanium, metals which are used in strategic and specialist industries which include chipmaking and equipment for the telecoms industry and the military. Germanium is crucial to the production of military and telecommunications equipment, being used for fibre-optic and space technologies, whilst gallium forms a key component in semiconductors.  A European Union study of critical raw material highlights how China controls the supply of 94% of the world’s gallium and 83% of germanium, reports Bloomberg. Whilst these metals are not particularly rare and can be found globally, high processing costs and a lack of facilities can result in lags in the supply chain and higher prices for manufacturers. Such measures, however, will also reduce dependencies on China and likely stimulate the processing and production of these metals elsewhere, according to the Financial Times.

UK insurers to invest billions in startups and infrastructure

The British government is in ongoing discussions with large insurers over a pledge which would see investment of 5% of managed contribution pots, which equates to tens of billions of pounds, into start-ups and infrastructure projects. The agreement will form a core part of the speech by Chancellor of the Exchequer, Jeremy Hunt, at Mansion House next week. Negotiations on the specifics remain the final hurdle to the completion of the “compact” agreement, with various objections to the Treasury’s vision being raised, resulting in a dropped proposition whereby firms would be mandated to hand over a small financial contribution. The government hopes that a pledge by insurers would kickstart a longer reform process which would see greater investment in UK growth assets, reports Bloomberg.

Digital mental healthcare leader Kooth crosses the Atlantic

As detailed live on Sky News on Tuesday, the digital mental healthcare leader, Kooth, announced a $188m four year contract to provide its digital mental health and wellbeing platform to six million 13-25 year olds across California. The contract is part of a wider push from California Governor Newsom’s $4.7 billion investment in youth behavioural health, the Master Plan for Kids’ Mental Health, and the Children and Youth Behavioral Health Initiative. Separately, the Company also announced a proposed share placing where approximately £10m will be deployed to accelerate platform development and further Kooth’s wider international expansion strategy.

Top Tweets of the Week

• Bill Gates tweets: I joined #EEI2023 to discuss what it will take to build a clean energy future. In short: We need to build more transmission capacity and embrace new technologies—and we need to do it faster than we have before.
• Tom Warren, Senior Editor at The Verge tweets: Sega basically saying “not now” to a Microsoft acquisition. Bloomberg spoke to Sega’s co-COO who said “we are very close with Microsoft and have a great relationship with its management team.” Sega favors independence for now.
• TechCrunch tweets: Airbnb CEO Brian Chesky believes we are currently experiencing the loneliest era in human history, and emphasized a pressing need to reconstruct physical communities during a recent interview at Bloomberg’s Technology Summit in SF. What are your thoughts Chesky’s claim?

Number of the Week

$188m  – The value of Kooth’s four-year contract to provide its digital mental health and wellbeing platform to 6 million 13-25 year olds across California.

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