FTI Consulting News Bytes – 28 July 2023

FTI Consulting News Bytes

As Barbie stormed the box office last weekend, Monday brought news that Twitter is rebranding to… X. The question is: was Musk inspired by Barbie’s multiple identities? City AM is also entering a new era this week after it was bought by cult beauty owner THG. Today brings to a close a big week for Big Tech, with Alphabet, Meta and Microsoft all reporting earnings. Meanwhile “Corporate America” has pushed back at regulators which have voted for new rules on disclosures around cybersecurity breaches. Lastly, how is Israel’s political crisis affecting its tech startup scene?

This week’s news

The blue bird sheds its feathers 

Following a slew of significant changes at Twitter in recent months, Elon Musk has committed to a major corporate rebranding in a bid to create an “everything app” under a new brand: X. The light-blue bird which has been associated with the platform for over a decade was replaced with the X logo on Monday, the Financial Times reports. Long-term plans to integrate audio, video and payments into the primarily text-based platform will attempt to create “a global marketplace for ideas, goods, services, and opportunities” wrote Chief Executive Linda Yaccarino one day before the overhaul. The wider transformational pivot of the Company’s services responds to a series of recent setbacks. Changes in content moderation resulted in the loss of advertising revenue and the introduction of limits on viewing posts increased frustration amongst users. To add further to Twitter’s challenges, Meta released a competitor platform, Threads, earlier this month which threatens the company’s dominance in text-based media.  Twitter’s website says its former logo is the company’s “most recognisable asset”, and with Musk’s history of reversing public decisions, the weeks ahead will prove whether X is here to stay.

City AM enters its beauty era 

London business newspaper City AM has been bought by THG, an online health and beauty retailer, reports the Financial Times. The closure of the deal follows an extended period of financial uncertainty and administration, signalling that the future of City AM is secured. Questions raised around City AM becoming a commercial mouthpiece were put to bed by CEO Matt Moulding who stated that City AM would retain its “full editorial independence”. Whilst THG is mainly known for its beauty and nutrition businesses, it also creates content for its ecommerce clients.  Douglas McCabe, an analyst at Enders Analysis, commented that City AM had a “highly attractive” audience but an “under-developed ecommerce opportunity”. Moulding will seek to address the possibilities for both businesses, providing THG clients with greater access to a financially literate audience whilst increasing profits for City AM. Analysts have long argued that falls in print advertising revenues have strained the free sheet market, but following the acquisition City AM is “perfectly positioned” to take advantage of “the new media landscape” as expressed earlier this month by Co-Founder Lawson Muncaster. Moulding, a vocal supporter of UK business, was positive regarding the newspaper’s continued UK ownership, commenting that it would improve Britain’s “global competitiveness”.

That’s a wrap… on Big Tech results   

It was a busy week for Big Tech, and AI was – of course – the buzzword on everyone’s lips. In Microsoft’s Q4 earnings release, Chairman and CEO, Satya Nadella reiterated the Company’s focus on leading the new AI platform shift, and commented “organisations are asking not only how, but how fast, they can apply this next generation of AI to address the biggest opportunities and challenges they face, safely and responsibly”, as Microsoft, Alphabet, and Meta all signalled that investment in AI will continue. Microsoft posted revenues of $56.2bn (up 8% year-on-year), which Executive Vice President and CFO Amy Hood said was driven by Microsoft Cloud revenues in the quarter. Alphabet’s Q2 profit exceeded Wall Street Expectations, Reuters reports, as its results were boosted by a rebound in advertising and demand for cloud services. Elsewhere, investors responded positively to Meta’s results, which saw revenues rise 11%, ahead of analysts’ estimates; Mark Zuckerberg, CEO of Meta “I’m really proud of our teams for everything we’ve accomplished so far this year”, adding “It’s been a tough year in a lot of ways. But it’s also been an impactful one. I’m quite optimistic about the road ahead.” Other Big Tech firms, Amazon and Apple, are due to report earnings next week on 3rd August.

Cyber crackdown for Corporate America

The US Securities and Exchange Commission (SEC) has voted 3-2 to adopt new rules requiring American public companies to disclose more to investors about cybersecurity breaches and the measures being taken to combat them, CNBC reports. This will require corporates to tell investors about “material” cybersecurity breaches within 4 days after an incident has been deemed material; the SEC believes it is necessary to collect the data to protect investors. ‘Corporate America’ is pushing back, arguing that the short announcement period is unreasonable and denies companies time to focus on remediating and mitigating the impacts of any incidents. Another prominent industry concern is that premature public disclosure could harm corporations and be exploited by cybercriminals. In a letter from the NYSE, on behalf of its listed companies, Hope Jarkowski, NYSE Group General Counsel, wrote to the SEC that “premature public disclosure of an incident without certainty that the threat has been extinguished could provide bad actors with useful information to expand an attack”. The final rules will become effective 30 days following publication of the release in the Federal Register.

Should I stay or should I go? Troubled waters in Startup Nation

Following Israel’s controversial reforms to the supreme court, protests have broken out as the country is locked in a political crisis. WIRED examines the effect of the conflict on Israel’s influential tech sector, coined “Startup Nation”. Many in the tech sector are against the judicial reform bill, citing concerns it will impact economic and social stability. Nearly 70% of Israeli startups are distancing themselves from their home country, moving headquarters and shifting cash overseas. The decision to leave is becoming increasingly popular. Over half of new companies established in March 2023 – the same month as the bill passed through parliament – were incorporated as foreign rather than Israeli companies. Additionally, the COO for Wix, one of Israel’s best-known tech companies, told WIRED that the measures introduce uncertainty not just for investors but also those who want to live a liberal life in the country, in turn impacting tech talent.

Top Tweets of the Week

• Jon Sopel pays tribute to former BBC colleague George Alagiah: Tributes will rightly be paid to a fantastic journalist and brilliant broadcaster – but George was the most decent, principled, kindest, most honourable man I have ever worked with. What a loss.
• Sundar Pichai, CEO, Google and Alphabet: Hello from London! Excited to be here with our local teams, do our earnings call, build on our discussions with government and political leaders to talk about the UK’s AI opportunity, and enjoy the sun while it’s out.
• James Titcomb, Technology Editor, Daily Telegraph: NEW: former owner of @x handle tells me he didn’t sell the account: “Twitter just took it essentially”. They offered some merchandise and a meeting.

Number of the Week

£276m  – Barbie’s opening weekend box office sales: the biggest ever debut for a film directed by a woman.

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