Read this Tuesday’s edition of the FolhaMercado newsletter (16) – 05/16/2023 – Market

ANDsta is the edition of newsletterr FolhaMercado this Tuesday (16). want to receive it from monday to Friday at 7 am In your email? Sign up below:

---

EU approves deal, now what?

Three weeks after suffering a significant blow, Microsoft’s purchase of producer Activision Blizzard was cleared by antitrust regulators in the European Union (EU) this Monday.

• The US$ 69 billion (about R$ 339 billion) deal was announced last year as the biggest in the history of the games sector.

The first defeat for the deal came with the rejection of UK regulators, on the grounds that it would give Microsoft an unfair advantage in the still nascent market for “cloud gaming” (cloud games).

• This type of technology allows video games to be played at the distance of a click, as it already works with movies and music on streaming services.

European regulators, however, said that the “medicines” promised by Microsoft, such as free ten-year licenses for Activision games on rival cloud gaming platforms, are sufficient and would even improve the current situation in the sector.

And now? The EU victory is expected to be used by the companies as an argument in the appeal as it barred business in the UK, but the decision is unlikely to be reversed, experts told the Wall Street Journal.

• That’s why Activision shares, which fell 11% after the British negative, barely moved on Monday.

• The next battle is at the FTC, the US antitrust body, with the first hearing scheduled for August.

An analyst at manager Raymond James considers that the chances of success for the business are between 10% and 15%, according to the WSJ.

• If the purchase does not go ahead due to regulatory problems, Microsoft will have to pay $3 billion to Activision.

---

Vice, former media darling, asks RJ

Vice announced this Monday that it filed for bankruptcy protection (RJ) and that it received an acquisition offer from its main creditors to avoid bankruptcy.

The media company that grew on the promise of attracting millennial readers (born 1981 to 1986) was once valued at $5.7 billion in 2017.

In numbers: in RJ’s request, Vice claimed to have $834 million in debt and $350 million in assets.

• The offer to buy from the group of lenders, which includes Fortress Investment Group and Soros Fund Management, is for $225 million.

• The proposal even offers a loan of US$ 20 million for the company to continue operating.

What explains Vice’s crisis: it was the fashion media company of the past decade with a commitment to “gonzo” journalism – immersive reporting, told in the first person.

Analysts point out that one of their biggest mistakes was prioritizing a business model dependent on advertising, having to fight an inglorious duel in a ring dominated by big techs.

• In addition, the popularization of platforms such as YouTube, Facebook, Instagram and TikTok made it easier for users to access the same type of content offered by Vice.

---

Global race for AI regulation

Amid the popularization of new AI (artificial intelligence) tools and the emergence of concerns about them, countries are trying to get in on the game and streamline their regulatory projects involving technology.

• According to the OECD (Organization for Economic Co-operation and Development), there are more than 800 policy initiatives to deal with AI today, in 69 countries.

In Brazilthe president of the Senate, Rodrigo Pacheco (PSD-MG), presented this month a bill to establish a legal framework for artificial intelligence.

The text was discussed for nine months by experts and has general guidelines for the development, implementation and responsible use of AI. It provides for the creation of a supervisory body and is based on three major axes:

• Principles and rights of those affected;
• Risk classification;
• Oversight and accountability.

How is the discussion going elsewhere:

European Union: it is one of the most advanced legislations. The project approved on Thursday (11) by the European Parliament is focused on different levels of system risks – see which ones here.

China: Requires models to be trained on accurate data that cannot discriminate. They have to “reflect fundamental socialist values ​​and must not contain content related to the subversion of state power”.

USA: it is not a regulation, but a series of principles to be applied by public administration bodies, such as protection against algorithmic discrimination, guarantee of human intervention in processes and security of systems.

---

Dollar at lowest since June 21

After falling 0.65% this Monday, the dollar ended the day at BRL 4.89at the lowest level since June last year.

• The Exchange had its eighth positive session, up 0.52%, 109,029 points.

Which explains: the retreat of the dollar this second was not motivated by a specific news. The movement accompanied the recent weakening of the American currency against other currencies, mainly emerging ones.

One of the reasons is the difference between interest rates in countries.

In the US, there are analysts betting on a drop in the rate this year after the Fed signals the end of the cycle’s rise at the next meeting. In Brazil, the projection of part of the market is that the Selic should be stopped in 2023.

Out thereone reason for the dollar’s weakening against emerging currencies is talks to raise the country’s debt ceiling.

• Although a default is not considered, investors’ risk aversion increases until a solution is found.

More about Exchange and companies: