FTI Consulting News Bytes – 5 April 2024

FTI Consulting News Bytes

This week, the UK and US signed a groundbreaking agreement focused on testing the safety of AI, marking a significant step in global efforts to assess the risks. Next, we turn to Europe’s IPO market which reports this week reveal that it remains stagnant for tech companies, with venture capital funding also experiencing a slowdown. That said, it’s been a bright week for Silicon Valley chip startup SiMa.ai as the company has raised $70 million to develop chips aimed at accelerating AI applications within everyday consumer devices. Lastly, we look at how increasing competition and regulation is impacting big tech from Microsoft to Tesla. Microsoft, under scrutiny from competition regulators, has announced plans to sell its Teams platform separately from its Office suite, a move seen as an attempt to address concerns of unfair competition. Tesla also faces challenges with falling deliveries and competition, despite which, it aims to maintain its position as the world’s largest electric vehicle seller.

Next week, we look forward to welcoming you at our fireside chat with FT’s Madhu Murgia and Sifted’s News Editor Tim Smith. They will explore how AI touches everything from our interpersonal relationships to education, work, finances, public services and even human rights. Copies of Madhu’s latest book CODE DEPENDENT: Living in the Shadow of AI will be available for signing too. 

This week’s news

UK and US sign landmark AI agreement

The UK and US signed the first bilateral agreement on testing the safety of AI as global governments seek to assess and regulate risks from emerging technology. The Financial Times reported that the deal outlines how the two governments will share technical knowledge, information and talent on AI safety, and will test and assess risks from emerging AI models. UK science minister Michelle Donelan insisted that despite conducting research on AI safety and ensuring guardrails were in place, the UK did not plan to regulate the technology more broadly in the near term as it was evolving too rapidly.

Europe’s IPO market stagnates as VC funding continues to slow

Despite a tentative rebound in European IPOs in 2024, Bloomberg reports that tech companies have been unable to successfully raise money on Europe’s exchanges in two years. The most recent significant tech IPO in Europe was Technoprobe SpA, which raised more than $800 million in early 2022. This is in stark contrast with the US, where the loss-making social media company Reddit raised $860 million last month, touting its vision of profiting from the growth of AI, despite revealing a 2023 net loss of $90.8 million. The Financial Times adds that although there has been a handful of successful public listings for VC-back companies recently in the US, venture capitalists are increasingly struggling to raise new funds, signalling the end of an era of “megafunds” and a slowdown in start-up dealmaking over the coming years.

Chip startup raises $70M for multimodal GenAI chip 

Silicon Valley chip startup SiMa.ai has raised $70 million in a funding round to develop chips designed to speed up AI applications within everyday consumer devices from cameras to cars. Bloomberg adds that its board carries significant pedigree with executives from Taiwan Semiconductor Manufacturing Co and Intel. SiMa.ai’s chips do not target AI training, where high-end processors such as Nvidia Corp.’s chips teach AI models things like what’s a dog or a cat, or build services like ChatGPT. The startup is instead focused on inference, where the AI model on devices identifies objects. They are one of a growing number of startups trying to perfect hardware for a future where AI is mainstream.

Microsoft to sell Teams separately from Office amid competition regulator scrutiny of big tech 

After coming under scrutiny from competition regulators, Microsoft has announced it will sell Teams, its online meeting platform, separately from its Office suite – an approach the company took six months ago in Europe and is now taking globally. According to The Times, the commission has been investigating Microsoft’s combined marketing of Office and Teams since Slack and other rivals complained that packaging Teams with Office gives Microsoft an unfair advantage. The move to sell Teams separately has been seen by software industry commentators as an attempt to appease competition regulators amid increasing scrutiny of big tech companies.

Tesla reaches fork in the road

As Tesla faces rising competition and weaker demand, the world’s most valuable carmaker has reported a quarterly fall in deliveries for the first time in nearly four years. Tesla is facing new competition from legacy automakers, most of which are introducing new EV models as they move forward with plans to shift to electrics. The Times reported that the company attributed the drop partly to the phased-in updated version of the Model 3 saloon and plant shutdowns due to various reasons. Despite cutting prices for some models, which impacted profit margins, Tesla’s stock saw a significant drop, losing about $33 billion in value, prompting concerns among investors and analysts. However, despite challenges, there is hope that Tesla will regain its position as the world’s largest electric vehicle seller, as BYD, China’s biggest EV maker, recently reported a significant drop in first-quarter sales.

Top Tweets of the Week

• Richard Tyler, Editor, Times Enterprise Network tweets “we’ve started our search for Britain’s fastest-growing private companies, published in June in our annual #SundayTimes100 ranking.”
• Techmeme referencing a story by Kyle Wiggers, technology journalist for TechCrunch, tweeted a story about big tech: “Cisco launches the AI-Enabled ICT Workforce Consortium, joined by Google, Microsoft, IBM, Intel, SAP and Accenture, to research AI’s impact on 56 ICT job roles.”
• Adam Grant an Organisational Psychologist at Wharton referencing an MIT article, tweets: “Calling people ‘toxic’ is rarely helpful. It focuses on their impact instead of their actions. Toxicity comes in 5 flavours: disrespectful, dishonest, cutthroat, exclusionary, and abusive. A good warning pinpoints patterns of behaviour that are problematic and persistent.”

Number of the Week

€29.9bn – The amount European tech companies raised in Q1 2024