FTI Consulting News Bytes – 12th August

This week’s news

EU plans for Artificial Intelligence Act

The EU is planning to introduce the first comprehensive global template for regulating artificial intelligence (AI), The Guardian reports. The legislation, known as the Artificial Intelligence Act, will apply to any institution that serves EU customers, including UK banks. The decision comes after fears around the use of AI in ‘high risk’ scenarios, including filtering job, university or welfare applications, or, in the case of lenders, assessing the creditworthiness of potential borrowers. A controversial example of the latter came to light in 2019 when David Heinemeier Hansson, a high-profile tech entrepreneur, lashed out at Apple’s newly launched credit card, calling it “sexist” for offering his wife a credit limit 20 times lower than his own. Alexandru Circiumaru, European public policy lead at the Ada Lovelace Institute, said the AI Act could come into effect in late 2024, and would benefit tech companies that managed to develop “trustworthy AI” models compliant with the new EU rules.

Social media platforms’ big bet on livestream shopping

Social media platforms are betting that livestreams will be the future of shopping, as they hope to emulate the huge success this industry has had in China, where it is expected that live ecommerce sales will reach $423bn this year.  Efforts by companies including TikTok, YouTube, Facebook and Instagram to bring the livestream shopping model to western consumers have had a rocky start.  The Financial Times reports that the platforms are seeing low viewing numbers of the livestreams, poor sales, logistical challenges, and “clunky” tech. Meanwhile, many influencers, brands, and merchants are sceptical of live ecommerce, which involves influencers promoting products in livestreams, featuring large discounts, flash sales, and mystery boxes to attract buyers. British influencers have complained that livestreams on TikTok, which can last for hours, were repetitive, exhausting and difficult to host, however some influencers have enjoyed success, generating tens of thousands of pounds in sales.

Deliveroo losses soar to £147m amid cost of living crisis

Losses at Deliveroo soared by more than half to £147m in the first six months of the year, as the cost of living crisis affects the demand for takeaways, The Guardian reports. The company also announced that Simon Wolfson, chief executive of Next, is stepping down from the board with immediate effect. Despite revenues rising 12% year on year to £1.01bn in the first six months, pre-tax losses widened by 54% due to the rising cost of delivery riders and staff – particularly those in technology roles. Revenue growth slowed dramatically from 12% in the first quarter to just 2% in the three months to end of June, with consumers cutting back on non-essential spending as the cost of living crisis continues to bite. Deliveroo’s share price has fallen by three-quarters in the past year, following its flotation in London in March 2021.

Small businesses count cost of Apple’s privacy changes

According to the Financial Times, small businesses and online brands reliant on personalised ads are having to reduce marketing spending, as Apple’s privacy changes have made it more difficult to target new customers online. Last year, Apple started forcing app developers to gain permission to track users and suggest personalised adverts.  The move formed part of a growing trend that has resulted in the loss of billions of dollars in revenues for online advertising giants such as Facebook and Twitter. Small businesses which rely on online ads to attract customers began to notice the full impact of the restrictions when price inflation and the cost-of-living crisis saw a reduction in consumer demand for their products. Companies are now cutting back marketing spending to save money, as targeting consumers becomes increasingly expensive. One small business owner commented: “Ads have become more expensive, we have less access to data, and they aren’t as effective as they used to be”.

Baidu to operate fully driverless robotaxis in China

The internet group Baidu has secured permits to operate the first-ever fully driverless licensed robotaxis in China, Tech Crunch reports. Baidu will be able to operate its Apollo GO cars in Wuhan and Chonqing, with no human driver required to be onboard. Winning this permit has given Baidu an early lead over rivals, including AutoX, WeRide, and Pony.ai, in terms of on-ground testing in the race to launch autonomous cars in China; it will enable Baidu to carry out more testing of its vehicles, according to analysts. In April, Baidu and Pony.ai won approval to provide driverless ride-hailing services to the public on open roads in Beijing, though a safety operator is still required to be seated in the passenger seat. In July, Baidu was able to start charging for these rides.

Top Tweets of the Week

• Mark Butler MP – ‘We’ve acted to delete the Morrison Government’s failed COVIDSafe app. Scott Morrison said this app would be our “sunscreen” against COVID-19. All it did was burn through taxpayer’s money.’
• Morrison Foerster – ‘The EU Council gave its final approval to the EU’s Digital Markets Act, the first-ever initiative to set pan-European rules for digital “gatekeepers.”’
• Josh Gilbert – ‘#Disney total subscribers tops #Netflix for the first time ever. $DIS 221,100.00 vs $NFLX 220,672.00 The streaming battle continues.’

Number of the Week

$6.88 bn – The value of Tesla stock Elon Musk has sold ahead of his court battle with Twitter.

What’s happening next week?

• 14th – Saudi Aramco Q2 results
• 18th – A-Level results day
• 18th-20th – Network Rail workers on strike

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