FTI Consulting News Bytes – 18 March 2022

This week’s news

Landmark bill for online safety

The long anticipated Online Safety Bill was introduced by the UK government on Thursday, a dedicated framework to govern how social media companies and other platforms must respond to problematic content. This landmark bill introduced tougher and quicker criminal sanctions for tech bosses who fail to take action and new criminal offences for falsifying and destroying data. The bill will give new powers to Ofcom, which will be able to request information from companies regarding any issues and will have the ability to fine rule-breakers up to 10% of annual turnover, according to TechCrunch. Many of the world’s largest technology companies including Meta and Alphabet will be held liable should they fail to address “legal but harmful content” on their platforms such as racism or bullying. Immediate reaction to the bill has been mixed with some commentators applauding it as a “huge moment for the safety of all internet users” with others calling the move a “recipe for disaster” due to the potential censorship of free and legal speech.

China lockdowns shock supply chains

A new round of COVID-19 restrictions enforced this week in certain Chinese cities is likely to exacerbate global supply chain challenges for technology companies. Local government in Shenzhen, a technology manufacturing hub, on Monday ordered for all but essential factories in the city to halt production for a week. Following the announcement, over 70 Taiwanese companies and dozens of local Chinese manufacturers have halted production. Whilst many tech companies stated externally that a week-long shutdown could be managed, some leaked internal reports indicated that supply chains in southern China had already seen significant disruption, according to the FT. Traffic controls and other movement restrictions in Shenzhen districts have crippled exports, exacerbating strains on ocean freight already impacted by the war in Ukraine.  Transport between Hong Kong and the Chinese mainland was said to be in “semi meltdown status” according to an internal note from one Shenzhen technology company.

Instagram out, Rossgram in

Russian Instagram users awoke on Monday morning to see the popular photo sharing app would no longer load or refresh content on their feed. Earlier in March, Russia had named Instagram’s parent company, Meta, as an extremist platform and stated Instagram was being used to distribute “informational materials containing calls to commit violent acts”. According to Reuters, Instagram had just over 80 million users in Russia, half of its current population. This has left space for Russian tech entrepreneurs to plan the launch of a domestic competitor to Instagram, ‘Rossgram’, on March 28. The new service will have similar photo sharing functionality as Instagram and additional services such as crowd funding and paid access for premium content.

Cybersecurity merger hits snag

The $8bn potential merger between cybersecurity players NortonLifeLock and Avast hit a roadblock this week after the UK’s Competition and Markets Authority proposed launching an investigation into the deal, citing pricing and competition concerns. The deal, announced in August, was intended to create a business selling online security software to half a billion customers, according to the FT. David Stewart, executive director at the CMA commented that the purchase “could lead to a reduction in competition in the UK and ultimately a worse deal for consumers when looking for cyber safety software.” After the CMA’s announcement Avast shares fell by 11% and Norton’s by 6%  on Wednesday. Avast said in a statement it continued to believe in the “strategic logic for the merger” and was collaborating with the CMA.

Spotify enters NFTs

Finally, Spotify has become the latest tech giant to enter the NFT market with plans to add blockchain technology to its streaming service. The news followed Mark Zuckerberg confirming a report from the FT earlier this year that Instagram would soon support non fungible tokens. Twitter, Reddit and a number of other social media companies are currently working on building out NFT capability on their platforms. The frothy NFT market has been viewed with skepticism by many but has shown no signs of slowing down. The crypto industry is looking to music as the next big area for NFT use including in digital albums, exclusive merchandise or backstage passes, according to the FT.  Spotify looks to be actively recruiting for specific engineering and managerial roles to explore growth opportunities through new and disruptive technologies.

Top Tweets of the Week

• Elon Musk  tweets “I hereby challenge Vladmir Putin to single hand combat. Stakes are Ukraine. Do you agree to this fight?” (In Russian)
• Peter Elstrom, Executive Editor at Bloomberg, tweets “Check out Sea CEO’s memo to staff after his company’s painful 75% tumble: ‘This drop is painful, and you might be feeling frustrated, disheartened, or worried about Sea’s future,’ the 44-year-old wrote.”
• Piyush Goyal, Indian Cabinet minister, tweets “Addressed the ACMA Aatmanirbhar Awards & Technology Summit 2022. With strength, resilience & structural changes underway in the mobility landscape, our automotive sector is well poised to be a key player for building an Aatmanirbhar India.”

Number of the Week

$12bn – Valuation of Getir, a rapid grocery delivery startup, following a $800m funding round

What’s happening next week?

• 22 March – BuzzFeed Q4 results
• 23 March – UK Chancellor’s Spring Statement
• 23 March – Blue Origin rocket launch

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