What’s been going on in the commercial world over the past week? Read on to find out!
This week, Microsoft announced its $19bn acquisition of speech recognition company Nuance. This is the latest in a succession of billion-dollar acquisitions completed by the Big Tech company. For example, Microsoft paid $7.6bn for gaming company Zenimax in September 2020 and its March 2021 $10bn offer for chat platform Discord is currently under consideration. There are also reports Microsoft CEO Satya Nadella offered $30bn for TikTok in August last year. If the Nuance deal is approved, it will mark Microsoft’s largest purchase since it bought LinkedIn for $26bn in 2016.
Nuance Communications is a huge player in the US healthcare market, with its Dragon software primarily used for AI transcription tools by medical professionals. In 2020, 62% of the company’s revenue came from healthcare. It is believed that 77% of hospitals in the US already use Nuance in some capacity. The software used ‘Dragon’ is an industry leader in terms of transcription accuracy and has previously been licensed to Apple for its digital assistant Siri.
Microsoft’s purchase represents the current wider market trend: the digitalisation of healthcare:
Digitisation of healthcare is not a US trend. Chinese e-commerce giants Alibaba and JD.com have launched their own online pharmacy and medical services in China. Alibaba has listed its healthcare business in Hong Kong. In Europe, 2020 investment into healthtech jumped up by $750m from the previous year. The combined value of Europe-based healthtechs has grown six-fold from $8bn in 2016 to $41 in 2021.
The UK remains Europe’s leader in healthtech start-ups, with 164 new companies from 2010-2020. The DACH region (Austria, Germany and Switzerland) and Northern Europe recorded 95 and 94 respectively. It should be acknowledged that the UK is a highly capitalised market, which received twice as much investment as the DACH region during the decade. The fact venture capitalists sought to invest in riskier healthcare start-ups as opposed to already established companies during the pandemic could be an indicator of the market’s imminent growth.
Talking points: Big Tech has competed in gaming, electronics, etc – is healthcare the next big industry for them to conquer? When should antitrust/competition regulators intervene? What type of UK healthcare start-ups are receiving funding?
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This week, British retailer Marks & Spencer filed an intellectual property claim with the High Court. The dispute concerns German rival Aldi’s creation of a ‘Cuthbert the Caterpillar’ cake, a lookalike version of M&S’ famous ‘Colin the Caterpillar’ cake. The legal claim alleges that Aldi’s cake both ‘rides on the coat-tails’ of M&S’ reputation, and, has infringed the design and packaging of ‘Colin the Caterpillar’. Marks & Spencer’s legal team is seeking Cuthbert’s removal from sale and for Aldi to sign a settlement agreeing to not produce lookalikes of M&S products in the future. M&S already has three trademarks over Colin and strongly believe this entitles the cake to hold enhanced distinctive character and reputation, meaning Aldi has broken the law.
M&S launched its staple cake in 1990. Since 2004, the design, taste, and packaging of the cake has remained largely unchanged. ‘Colin’ has gained a great deal of popularity, for example as a birthday cake and has a charitable association with Macmillan Cancer Support. In the interim, rival supermarkets have brought out their own similar products: Waitrose’s Cecil, Sainsbury’s Wiggles, Tesco’s Curly, and Asda’s Clyde the Caterpillar. Cuthbert is currently not on sale.
Talking point: What other products has Aldi contentiously ‘copied’ and has the German retailer faced any trademark action before?
This week, the Competition and Markets Authority (CMA) approved 02 and Virgin Media’s £31bn merger. Telefonica-owned 02 and Liberty Global-owned Virgin Media planned to combine their UK assets in May last year. The main motivation for the merger was to combine customer bases, in order to reach 34m consumers, making the largest network in the UK.
Recently, the CMA decided that the merger would not lead to higher prices or reduce service quality for customers, and therefore should go ahead. The CMA also considered wholesale services supplied by other network operators in the market. Sky and Vodafone both raised objections arguing that the 02-Virgin Media merger would be anti-competitive. The 50-50 joint venture will now be able to challenge market-leader BT, who acquired EE for £12.5bn in 2016 and has been in a strong position since.
Talking point: What are the features of an anti-competitive market?
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