FTI Consulting News Bytes – 1 December 2023

FTI Consulting News Bytes

We kick off this week’s newsletter by looking at Adobe’s thwarted attempt to acquire UK software firm Figma. The UK’s competition watchdog is reportedly set to block the deal on the grounds that a merger could harm competition in the digital marketing software sector, a market in the UK where Figma already possesses roughly an 80% share. Elsewhere, Amazon launched Q, its new AI-powered chatbot for the workplace, at its re:Invent conference in Las Vegas. Atomico has also released its annual ‘State of European Tech’ report, resulting in some gloomy headlines centred around a stark decline for European start-up funding. The UK Government and Big Tech have joined forces to launch the Online Fraud Charter – a “world-first” initiative to combat scams, fake adverts and romance fraud. Lastly, we dive into a new Ofcom report which has found that nearly four in five British teenagers have used generative AI tools and services.

This week’s news

UK regulator to block Adobe’s mega takeover of Figma    

In regulatory news this week, the UK’s Competition and Markets Authority (CMA) is reportedly leaning towards blocking US software giant Adobe’s proposed $20 billion acquisition of Figma. The CMA is concerned that the takeover could stifle competition and limit consumer choice in the digital marketing software sector. According to The Times, “about 80 per cent of the professional product design market in Britain used Figma’s software and that a tie-up with Adobe, its closest rival, could harm competition in product design, image editing and illustration.” Adobe, known for its design and marketing software, has earmarked the takeover to bolster its digital app offering. Adobe and Figma now have the opportunity to put forward potential solutions to the CMA before a final decision is made by the end of February next year. The news follows Microsoft’s acquisition of Activision Blizzard which was initially blocked by the CMA before a restructured deal was waved through. It also comes after recent comments made by the UK Government asking the CMA to consider the economic consequences of its decision making, widely seen as an effort promote a more friendly regulatory environment for the technology sector.

Amazon launches Q – its AI-powered chatbot for business 

The biggest piece of news emanating from Amazon Web Services’ re:Invent conference in Las Vegas this week was the launch of Q – Amazon’s new AI-powered chatbot for the workplace. Marking the latest GenAI development and a year on from the arrival of ChatGPT, Q is aimed specifically at businesses and designed to boost productivity through various functions. According to The New York Times, “Q aims to help employees with daily tasks, such as summarizing strategy documents, filling out internal support tickets and answering questions about company policy. It will compete with other corporate chatbots, including Copilot, Google’s Duet AI and ChatGPT Enterprise.” Amid widespread privacy and security concerns related to AI assistants, Amazon made a point to reassure stakeholders that Q has been built to be more secure and private than a consumer chatbot, ensuring protection of corporate data. Q was just one of a number of announcements made at re:Invent, as Amazon also shared plans to bolster its computing infrastructure for AI and expand its long-term partnership with chip-maker Nvidia.

European tech funding plunged in 2023

Funding for European technology companies plunged by nearly half this year, according to an annual report by Atomico. The Financial Times reports that the amount of money raised by tech start-ups in Europe is expected to reach nearly $45bn in 2023, down from $82bn last year. The absence of large fundraising rounds in Europe combined with reduced US and Asian institutional investment in European tech as a result of challenging macro headwinds are seen as two of the primary contributors to the shortfall. Tom Wehmeier, head of data insights at Atomico, said there had been a “reset after an overheated and unsustainable period of growth in 2021 and early 2022” but added that “green shoots are starting to emerge.” Indeed, one area defying the decline in overall funding is AI. There has been a proliferation of fundraising for AI companies with 11 of the 36 European tech deals worth more than $100mn this year being AI businesses. Europe has also cemented its position as a global hub for AI talent, with the number of highly-skilled AI roles rising 10-fold over the past decade and outstripping the US.

UK Gov. & Big Tech launch the Online Fraud Charter 

On Thursday, UK Home Secretary James Cleverly hosted representatives from leading global tech firms as part of the launch of the Online Fraud Charter – a “world-first” initiative to combat scams, fake adverts and romance fraud. As reported by Sky News, “the charter will call on the firms to introduce a number of measures to better protect users, including verifying new advertisers and promptly removing fraudulent content.” TikTok, Snapchat and YouTube are among more than ten companies to have signed the voluntary agreement. The public-private collaboration to better protect consumers against fraud comes amid fears from cyber security experts that the rise of generative AI tools is helping cybercriminals create more convincing and sophisticated scams.

Gen Z adopting GenAI en masse 

A new report from Ofcom found that nearly four in five British teenagers have used generative AI tools and services, highlighting the rapid adoption of the fast-evolving technology among a new generation of internet users. The report reveals that people are spending an extra two days annually online, as daily internet usage reached three hours and 41 minutes compared to last year, and YouTube has overtaken Facebook as UK’s most visited website. According to the Financial Times, Ofcom said some AI tools would fall under the scope of new online safety laws, adding: “We’ll be looking at how these companies are proactively assessing the safety risks of their products and implementing effective mitigations to protect users from potential harms.”

Top Tweets of the Week

• Guardian Environment: Most sponsors of Cop28 have not signed up to UN-backed net zero targets
• Katie Prescott, Technology Business Editor, The Times: The UK is third in the world for total inward investment, says @KemiBadenoch as she lists investments including Nissan’s in Sunderland
• Financial Times: Breaking news: The United Arab Emirates is preparing to launch a $30bn climate-related investment fund with BlackRock, TPG and Brookfield.

Number of the Week

£1bn – The value of second-hand shopping on Amazon across Europe, as the UK business opened its pop-up Second Chance store in London this week.