Global Business Daily: EU's Big Tech crackdown, Uber fined, Reebok for sale?
"The Commission should take direct aim and at least dismantle the perverse business model of these tech giants; monetizing personal data by the selling of advertising."
The words of Dutch MEP Paul Tang represent the abrupt mood change across Europe towards Big Tech and Silicon Valley over the past two years. Once seen as a model of emulation, policymakers are now seeking radical action to curtail the power of Facebook and other platforms. Draft legislation announced by the European Commission today, if passed, could make Europe the toughest place in the world for tech giants to do business.
In a separate ruling that could bode ill for the technology sector, regulators in California have handed Uber a $59 million fine and threatened it with a suspension of license over the firm's refusal to submit data on alleged sexual assaults of passengers and other incidents. Uber had argued its case on the premise of client privacy.
Elsewhere, there's further evidence of the chaos that months of lockdown have caused Europe's retail sector. The world's second biggest fashion chain, Sweden's H&M says fourth-quarter sales were down by 10 percent year-on-year. The full impact of the second COVID-19 wave won't be known until more results start coming out next month.
And staying with fashion, the cut-throat world of designer sneakers may have gained a scalp with the news that the once prestige label Reebok is about to be offloaded by its parent company, Germany's Adidas. Adidas bought Reebok in 2005 in a bid to gain ground on Nike in the fast-paced U.S. market but sales have flattened in recent years.
That hasn't stopped UK budget discounter JD Sports targeting California-based sportswear outlet Shoe Palace in $325 million all-cash deal. JD Sports is said to be keen to target the growing demand for sportswear in the U.S. Latino market.
Read on for this and more of the day's business news in detail.
The EU has sounded its loudest warning yet that it is prepared to break up big tech firms if they engage in anti-competitive practices and fail to police the publishing of illegal and harmful content. It comes as Brussels prepares to publish its two most sweeping pieces of tech legislation in years.
The Digital Services and Digital Markets Acts together threaten fines of up to 10 percent of global annual revenues on tech firms and even the forced separation of business models for repeat offenders. While there is currently no timetable for the draft legislation to come into force, if enacted the new laws would represent the toughest legislation on tech firms currently found anywhere in the world.
EU commissioners have complained of a "too big to care" attitude among industry giants such as Facebook and Amazon that requires reform, along with a more stringent approach to tax enforcement.
Meanwhile, the UK has published long-awaited plans for online safety, with a new "duty of care" for tech firms to remove harmful content and hate speech. Ofcom, the UK regulator, has threatened fines of up to $24 million or 10 percent of annual global turnover for failure to comply, with an ultimate threat to block platforms or impose criminal charges on management. However, the plans fall short however of insisting that platforms such as WhatsApp and Apple break end-to-end message encryption, a bug bear of law enforcement officials everywhere.
Apple has announced it plans to increase iPhone manufacturing by 30 percent in 2021. It's asked suppliers to make an extra 95 million models of the latest iPhone 12 and older iPhone 11 and SE next year, up a fifth on 2019, that's despite concerns over a shortage of parts.
Swiss insurance giant Swiss Re says it has incurred losses of more than $76 billion this year, up 40 percent on 2019, mostly due to the increase in natural disasters around the globe. Wildfires in Australia and California, along with extreme weather conditions in the U.S. and Europe are blamed. Earlier this month, Christian Mumenthaler, CEO of Swiss Re, warned the impact of the COVID-19 pandemic had probably been underestimated by the global insurance industry due to the unfactored cost of widespread lockdowns.
Meanwhile, the world's second biggest fashion retailer Sweden's H&M has blamed the lockdown for an estimated 10% fall in local currency sales in the final quarter of the year.
The UK’s biggest sportswear retailer JD Sports is to buy U.S. company Shoe Palace for $325 million. Shares rose 5 percent on the news. JD Sports, which bought the U.S. Finish Line sportswear brand two years ago, hopes the acquisition of Shoe Palace will increase its exposure to the growing Latino market on the West Coast.
Meanwhile, German sportswear giant Adidas is considering offloading Reebok, as its U.S.-based brand has continued to underperform in a crowded market. Adidas bought Boston-based Reebok in $3.8 billion deal in 2005 to increase its footprint in the U.S. But amid falling sales, Adidas has come under pressure from investors to sell it as a private company to a rival or seek private equity interest. A final decision is expected in the new year.
Uber has been fined $59 million by regulators in California for failing to provide information over sexual and physical assaults on staff and customers. Uber has 30 days to pay the penalty from the California Public Utilities Commission, which was imposed after it failed to give details of assault victims identified in a report last year, who had used its ride-hailing service between 2017-19. Uber has argued that handing over case details was a violation of an individual's privacy.
The lira has gained ground lost in Monday's trading after it was confirmed that planned U.S. sanctions for Turkey’s purchase of the Russian S-400 missile system will go ahead. The currency was back at 7.8 to the dollar by midday and 9.5 to the euro. The penalties, announced under the Countering America’s Adversaries Through Sanctions Act (CAATSA), will effectively ban export licenses to transfer American goods and technology to Turkey's Presidency of Defense Industries. Further sanctions against Turkey for its ongoing oil exploration in disputed waters in the eastern Mediterranean are currently being considered in Brussels.
WATCH: With the world's attention focused on the COVID-19 pandemic, the issue of climate change has been off the agenda for many governments. This week, however, the European Union upped its own 2030 commitments, pledging to cut carbon emissions by 55 percent from 1990 levels, while China has promised a cut of 65 percent with the year 2050 as its benchmark. CGTN Europe looks at the policies now being pursued to meet the Paris Accord goals.
As the Massachusetts Institute of Technology warns that half of all jobs in industrialized countries could be taken over by robots, CGTN Europe was joined by Ursula Huws of the University of Hertfordshire and Hector Gonzalez-Jimenez of the ESCP Business School to discuss the consequences of A1 on the world of work and crucially how us humans can remain employable.
Ursula Huws: Well, I do think that mass unemployment is certainly on the cards in some parts of the world, but I'm not sure that it's because of tech innovation. So you might get headline news that a factory or a warehouse, let's say, in Germany, is going to get rid of 2,000 jobs because they're bringing in robots. But you don't get the news perhaps on the other side. For the robot to learn what to do in a warehouse it has to learn to tell the difference between an egg and an orange and a self-driving car ... being reprogrammed. So there's lots and lots of actual hidden labor that goes into all these things that we see as destroying jobs that are actually creating different kinds of work.
Hector, do you agree then that there's a misconception out there, bad new tech, and old tech good?
Hector Gonzalez-Jimenez: I would even go further than saying there are existing jobs we don't know about. There are actually a lot of jobs that we don't know yet because they don't exist. So, yes, they might not be created right now, today, tomorrow, but perhaps two or three years from now they might be created, which we cannot predict. In the short to mid term, we talk about repetitive tasks, more mechanical tasks, even going into some analytics, because machines are nowadays very good at analytics already and are very good at doing certain repetitive tasks. But still, that human touch is still required to a certain point. So we're talking more about a reallocation of the type of jobs and skills that will be required.
And finally, OPEC, the cartel of oil-producing nations, has again cut its forecasts for demand in 2021 as it weighs up production plans for next year. At present, an extra half a million barrels a day from January looks the most likely option in the pandemic recovery period. But figures just out show the oil price is stuck well below recent norms.