FTI Consulting News Bytes – 28th April 2023

This week’s news

AI subs in as quarterback for Big Tech quarterly results 

It seems recent reports of Big Tech’s death appear to have been a little overstated following a week of largely positive quarterly results recorded by Microsoft, Alphabet and Meta, among others. Revenue at Microsoft’s cloud division climbed 16% in the first three months of 2023, while Google’s search advertising business also topped forecasts. Despite not being a key driver for the last quarter, AI was top of the agenda for Big Tech in conversations with investors and analysts as the competition for the developing industry-leading technology continues to intensify. Indeed, Microsoft Chief Executive Satya Nadella said the company was now “having conversations we never had” with clients keen to leverage AI. We covered Microsoft’s $10 billion investment in OpenAI in January and now it seems the company has plans to build out the AI infrastructure on its Azure cloud platform. Meanwhile, according to the Financial Times, “Meta reported a return to sales growth after three quarters of declines, sending its shares up 12 per cent and paving the way for it to plough ahead with a big bet on artificial intelligence.” In a week which saw Big Tech shrug off the macroeconomic boogieman with a positive round of results, it’s clear the subplot continues to be the global race for the best AI tech.

“Don’t stifle competition” – The Government’s message to Big Tech

This week saw the publication of the long-awaited Digital Markets, Competition and Consumer Bill, designed to promote greater competition in the online digital economy. Writing in The Times, Secretary of State for Science, Innovation and Technology, Michelle Donelan said the Bill will give greater power to the independent watchdog, the Digital Markets Unit (DMU), to “identify big tech companies with significant control over key digital markets – those at risk of impeding genuine choice and transparency for users.” These new legislative powers mean the regulator will be able to fine companies deemed to have “substantial and entrenched market power up to 10% of their global turnover for breaches of the new rules”, as reported by The Times. The Bill is also designed to tackle issues around fake online reviews and subscriptions that are difficult to cancel. It follows the introduction of the EU Digital Markets Act which has been set up to tackle similar competition issues with big tech firms. Donelan, however, notably compares the “blunt” approach of the EU, which puts blanket rules over all businesses, with the UK’s “flexible, bespoke and targeted approach” laid out in the new Bill. Trade associations and pro-competition lobby groups have largely welcomed the proposal, with Neil Ross, Associate Director of TechUK, calling it a “vital piece of legislation”, as per Politico.

E& requests a say in Vodafone board games

UAE investment group e& has raised its stake in Vodafone to 14.6% and initiated talks about the composition of its non-executive board. E&, formerly known as Etisalat, has been increasing its stake in Vodafone since May last year. The Financial Times acknowledges that Vodafone’s weak performance in key markets such as Germany, combined with the departure of chief executive Nick Read, have caused a 25% decline in the company’s share price since e& announced its initial holding. Bloomberg Intelligence maintains that the pursuit of board representation by Vodafone’s largest shareholder is a positive move, indicating e& may become a “proactive force to ensure execution aligns with its long-term strategy.” Vodafone’s other two strategic holders are Liberty Global, which holds almost 5%, and French billionaire Xavier Niel, who bought a 2.5% stake in September. Vodafone finished the week appointing Margherita Della Valle as permanent chief executive, the eighth female chief executive in the FTSE 100, who says “to realise our potential Vodafone needs to change.”

Bye-Bye Tucker: Fox News anchor axed following Dominion pay-out 

TV anchor Tucker Carlson has been fired from Fox News, where “he had been a key face for over a decade”, according to The Telegraph. The decision to terminate Carlson reportedly came directly from the company’s chairman, Rupert Murdoch. An article in the Wall Street Journal states that Carlson found out about his firing 10 minutes before it was announced. This came days after Fox News’ parent company settled Dominion Voting Systems’ defamation lawsuit for $787.5 million. Dominion had sued Fox for “intentionally and falsely” blaming Dominion for the 2020 loss of former President Donald Trump by airing unsubstantiated claims that the company’s machines rigged the election. Additionally, the network’s decision has been linked to a lawsuit filed by a former producer, Abby Grossberg. Grossberg has openly accused Carlson and his team of fostering a misogynistic and anti-Semitic work environment. To top it all off, Murdoch was reportedly concerned by Carlson’s coverage of the January 6, 2021, deadly attack on the US Capitol, in which he suggested one of the rioters was an FBI plant. Carlson himself does not know the exact reason why he was let go, and the question remains unanswered.

Netflix’ big bet on K-content 

On Monday, Netflix announced an investment of $2.5bn in South Korean entertainment as it seeks to tap into increasing demand for so-called K-content, following the successes of hit shows like Squid Game and fitness reality programme Physical:100. The streaming giant went public with its planned four-year investment to produce Korean dramas and films following a meeting between South Korean president Yoon Suk Yeol and Netflix co-chief executive Ted Sarandos in Washington. As reported by the Financial Times, Sarandos described K-content as  now “at the heart of the global cultural zeitgeist,” with Netflix users now spending time watching Korean shows more than from any country outside the U.S. Its large-scale investment in the Korean entertainment industry follows Netflix’s decision to cut subscription prices in countries around the world in an attempt to attract more customers, as well as a crackdown last week on password sharing. As BBC News reported: “Netflix has been looking for ways to re-ignite growth, which has slowed sharply as households grapple with rising costs and it reaches what analysts see as a saturation point in some of its biggest markets.”

Top Tweets of the Week

• Mark Kleinman, Sky News City Editor – Revealed: HIVED, a zero-emissions parcel delivery firm which counts ASOS and Zara among its clients, has raised £10m in Series A funding led by Planet A Ventures and including backing from the growth capital arm of logistics giant AP Moller-Maersk.
• Brent Hoberman, Co-Founder & Chairman, Founders Forum – Confirmed: Founders Forum Group acquires Tech Nation – https://t.co/RrtznP78DR
•  Brad Smith, Vice Chair and President of Microsoft – We remain fully committed to our acquisition with @ATVI_AB and will appeal today’s determination by the CMA.

Number of the Week

20%  – The amount Pret A Manger is increasing the cost of its coffee subscription from June

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