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Digital Digest – 04 February

In this week’s digital digest we look at Klarna’s credit card launch and proposals to force tech giants to pay for UK journalism.

We then take a look at big tech as Silicon valley’s attempts to prevent tighter US regulation and war games kick off in the gaming industry.

Closer To Home

Debt fears as Klarna launches credit card

Klarna’s plans to launch a credit card that would allow its customers to use its ‘Buy Now Pay Later’ service (BNPL) has sparked fears for consumer welfare. Debt charities have been outspoken against the move as BNPL schemes encourage consumers to spend money they don’t necessarily have. Klarna’s card will allow customers to delay payments by up to 30 days. While failure to repay in time would not incur the charge of interest or any other fees, it would risk a debt collector being appointed. Late payments will also soon start affecting customers when credit rating agencies start accepting Klarna’s data and therefore late payments would harm their score. Klarna is not currently monitored by the Financial Conduct Authority (FCA) meaning customers cannot complain to the Financial Ombudsman Service if they wish to report grievances. This may need to be remedied sooner rather than later considering that, according to Klarna, some 400,000 people have already signed up to a waiting list to get the card.

Strengthening the UK’s resilience from cyber attacks

Concerns that consumers are being put at risk due to tech firms exploiting online advertising have led to plans being drawn up to force big tech firms to pay for British newspaper stories. Facebook and Google took in around 80% of the revenue generated from online advertising expenditure in 2019, newspapers, on the other hand, took in less than 4%. Nadine Dorries, the culture secretary, is likely piggybacking off of Australia’s controversial law to force big tech to pay for news content. A source from the Department for Digital, Culture, Media and Sport (DCMS) has suggested that the plan will present “an important vehicle to tackle the imbalance of power between the largest platforms and publishers.” There are critics of the reform. One social media consultant suggested that news outlets actually benefit from social media as it increases traffic to their websites. The consultant thought the government would be better served by raising taxes on big tech firms or subsidising news outlets. The news of Dorries’ plans come after her recent controversial move to freeze the BBC license fee.

Big Tech increases funding to US foreign policy think-tanks

In an attempt to prevent stricter competition laws, Big Tech firms are pumping money into US foreign policy think-tanks. The line they are attempting to assert is that the measures being considered to clamp down on Silicon Valley would help make Chinese tech giants more powerful. Amazon, Google, Facebook and Apple’s increased funding to four major think tanks has doubled, according to research from the Financial Times, from $625,000 in 2017-18 to over $1.2m in 2019-20. These numbers could be even higher, and it is thought donations have continued to increase. These amounts may be small in relation to the overall worth of the firms, however, the rise in funding makes the tech giants the top donors to the think tanks, along with oil and gas companies. The tech firms have found success with this tactic. Twelve former leading national security officials linked to the think tanks recently wrote to congress to request they stop working on bills to regulate big tech more. The think tanks have denied being influenced by donations from the technology industry.

Sony to buy video game maker Bungie for $3.6bn as takeovers continue

The move by Japanese studio, Sony, follows Microsoft’s highly publicised purchase of Activision Blizzard, which totaled close to $70bn. Sony’s $3.6bn purchase of Bungie, the original developer of Xbox’s flagship series Halo, is a form of return fire. Bungie no longer develops Halo games but its recent big hit series, Destiny, of which it has released two installments, has seen it develop close ties with Sony, releasing exclusive content for its Playstation platforms. A big driver behind these two particular companies is that they both have huge online franchises, which tend to maintain a player base, and generate income, after release. Sony may worry that Microsoft could make Activision games an exclusive product to its Xbox console, at the expense of Sony’s own Playstation brand. In the case that Microsoft were to threaten to make one of Activision’s main franchises, such as Call of Duty, an Xbox exclusive, Sony could do the same with Bungie’s franchises. One analyst described the situation as being akin to ‘mutually assured destruction’.

Also In The News

  1. Boris Johnson pulled out of a highly publicised meeting with tech chiefs after the release of the Sue Gray report. See here.

  2. Spotify says it will start giving ‘content advisories’ on content containing potential covid misinformation as it looks to limit the damage of the Joe Rogan saga. See here.

  3. The teenager who asked Elon Musk for $50,000 to stop monitoring his flights is also tracking Bill Gates, Jeff Bezos and Drake. See here.

  4. Alphabet has announced a surge in advertising revenue from its Google search engine. See here.

  5. Tesla has been forced to fix 50,000 of its self driving cars after its software made some drive past stop signs. See here.

Worth A Read

  1. Wired: Britcoin is Coming. The Treasury is Woefully Underprepared

  2. Daily Telegraph: From laughing stock to potential Spotify-killer: the fall and rise of Tidal

  3. Daily Telegraph: Elon Musk fights to rid rural Britain of sluggish broadband in battle with BT.

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