Silicon Valley Tech News Roundup – October 15th

The EU warns TikTok, X, and Meta about Hamas videos – 10/13

This week, the European Union warned TikTok, Meta, and X (former Twitter) about “disinformation” spreading on their platforms after the attack on Israel. It includes mislabeled videos and doctored images.

On Tuesday, the EU has given X (former Twitter) 24 hours to remove problematic content. Linda Yaccarino responded X removed hundreds of accounts and removed or flagged “tens of thousands pieces of content.”

Meta (the parent company of Facebook and Instagram) received a similar warning. The company responded: “After the terrorist attacks by Hamas on Israel on Saturday, we quickly established a special operations center staffed with experts, including fluent Hebrew and Arabic speakers, to closely monitor and respond to this rapidly evolving situation… Our teams are working around the clock to keep our platforms safe, take action on content that violates our policies or local law, and coordinate with third-party fact-checkers in the region to limit the spread of misinformation. We’ll continue this work as this conflict unfolds.”

The EU Commissioner Thierry Breton wants the companies to prove they have taken “timely, diligent and objective action.”

The latest social media company to receive the EU warning is TikTok. Thierry Breton tweeted: “TikTok has a particular obligation to protect children & teenagers from violent content and terrorist propaganda as well as death challenges & potentially life-threatening content.”

The European Union introduced The Digital Services Act (DSA) in August of this year. It requires large online platforms to remove “illegal content” and, if required, provide proof they have taken measures to do so.

Microsoft acquires Activision Blizzard for $69 billion – 10/13

According to a regulatory filing on Friday, Microsoft finalized its $69 billion acquisition of Activision Blizzard. It is the largest deal in the company’s 48-year history. Bobby Kotick (the CEO of Activision Blizzard) will stay in the position until the end of the year.

The companies announced the deal in January 2022. However, Microsoft faced regulatory scrutiny and pushback. The Federal Trade Commission, the Competition and Markets Authority in the United Kingdom, and the European Commission all objected to the deal.

For the European Union, Microsoft agreed to give consumers free licenses to stream their Activision Blizzard games and free licenses to streaming providers so European residents can play the games through the cloud. The company also made several deals with cloud-gaming providers (like Nvidia and Boosteroid) and console makers (Sony and Nintendo) so they would have access to some games for a period of time.

On Friday, the Federal Trade Commission stated it still has concerns about the deal: ” We remain focused on the federal appeal process despite Microsoft and Activision closing their deal in advance of a scheduled December appeals court hearing… Microsoft and Activision’s new agreement with Ubisoft presents a whole new facet to the merger that will affect American consumers, which the FTC will assess as part of its ongoing administrative proceeding. The FTC continues to believe this deal is a threat to competition.”

Samsung’s operating profit in 3rd quarter drops 78% – 10/11

On Wednesday, Samsung released its earnings estimates for the third quarter. It reveals the company’s operating profit dropped 78%. It is a result of a lower demand for consumer devices.

Samsung forecasts its operating profit will be $1.8 billion (2.4 trillion Korean won) for the three months ending with September. It is a significant drop when compared to the same period last year ($8 billion or 10.85 trillion Korean won). The company also expects the revenue to drop 12.5%.

Experts believe that due to economic uncertainties, consumers are keeping their devices for longer and are reluctant to upgrade to new ones. Counterpoint Research revealed in its report in August: “2023 is on track to be the worst year for global smartphone shipments in 10 years.” Meanwhile, Bain (a management consultancy) published a report in September and concluded the trend is cyclical and a part of the normal ups and downs in the market.

Microsoft owes IRS $29 billion in back taxes – 10/11

In an 8-K filing on Wednesday, Microsoft revealed it received Notices of Proposed Adjustment from the Internal Revenue Service (the IRS). The IRS requires $29 billion from Microsoft in back tax payments.

In the filing, Microsoft stated: “Microsoft disagrees with these proposed adjustments and will pursue an appeal within the IRS, a process expected to take several years… We believe we have always followed the IRS’s rules and paid the taxes we owe in the U.S. and around the world.” If necessary, the company plans to contest the IRS’ claims in court.

According to Microsoft, the dispute has to do with the company’s allocated profits between jurisdictions and countries between 2004 and 2013. The $10 billion taxes already paid are not reflected in the proposed adjustments made by the IRS.