The Drum’s Daily Briefing: TikTok US ban greenlit, Gucci falters, Spotify profit boost
Our quickfire analysis of the brand, marketing and media stories that might just crop up in your meetings and conversations today.
TikTok US ban nears reality with Senate Bill
Senate passes Bill to outlaw TikTok in US
TikTok will be banned in the US if China-based owner ByteDance doesn’t sell the platform after the Senate passed a bill on Tuesday, which is expected to be signed by President Biden.
The new law gives ByteDance just one year to sell TikTok to a US-based company, or the app will face a total ban from American app stores.
Michael Beckerman, TikTok’s head of public policy for the Americas, has made it clear the company will fight the legislation in court. If the new federal law goes into effect without being blocked, Apple’s App Store and Google’s Play Store will be required to stop offering TikTok for download or face financial penalties.
The proposed ban is the culmination of a long political battle over the platform as lawmakers argue that TikTok’s China-based parent company could collect sensitive user data and censor content that goes against the Chinese government – claims TikTok denies. Multiple contentious congressional hearings have covered what TikTok’s data privacy practices are.
Gucci sales to tumble by almost half in 2024
The owner of luxury fashion brand Gucci, Kering SA, is warning that sales are set to tumble by up to 45% in the first half of 2024. The forecast that comes after sales fell 18% in Q1.
Gucci appointed a new creative director last year in the shape of Sabato De Sarno, whose designs began to enter stores in February. However, Kering is warning that it will take time for these changes to bed in and begin to positively impact the brand’s sales.
As it waits for these designs to bed in, Gucci is working on its handbag offering, which is a crucial category for the brand and it has plans to accelerate new launches this year.
The company continues to lag behind LVMH, its larger French rival and the owner of some 75 luxury brands including Christian Dior and Tiffany & Co. LVMH delivered 3% organic revenue growth in the first quarter. Hermes International SCA, which has also withstood the downturn better than most peers, will report sales on Thursday.
Earlier this week, US competition regulators questioned a deal that would see handbag brands Coach, Michael Kors, Jimmy Choo, and Versace come together under Tapestry company ownership to challenge LVMH.
Murdoch to sue ITV and ITN over Kate farm visit video
Rupert Murdoch is understood to be suing ITV and ITN over their use of video footage of the Princess of Wales visiting the infamous farm shop earlier this year as global media platforms went into overdrive during Kate’s disappearance from public life during an illness.
The video footage of Kate and William walking through the car park of a local farm shop was exclusively obtained by The Sun and showed the princess in public for the first time after she underwent abdominal surgery.
The footage was used by many other media organizations and now Murdoch’s News Group Newspapers, which publishes The Sun, has filed an intellectual property claim against the broadcasters that produce the ITV News programming.
ITV says it will resist any lawsuit after reportedly using a video exclusively released by The Sun.
Spotify revenues rise
Swedish music streaming brand Spotify has reported its quarterly gross profit has exceeded $1.1bn for the first time, a result that comes after the company reined in its marketing spend and made job cuts to reduce costs.
And while the streaming platform is reporting that quarterly revenue rose 20% to $3.9bn, it has failed to meet its targets in terms of monthly active users.
This rise in profits, alongside the missed user targets, has led CEO Daniel Ek to admit that perhaps the firm pulled back too much from marketing and say that the company is going to “add back some marketing spend over the year.”
Spotify shares, which initially fell on the quarter results, reversed course to rise 8% in pre-market trading on Tuesday.
Revenues around Spotify’s podcasts had been difficult last year, despite the company investing over a billion dollars to build up shows such as The Joe Rogan Experience. However, Ek says that they are now delivering profits.
Price cuts not rescuing Apple iPhone brand in China
Sales of Apple iPhones in China plunged by almost 20% in the first three months of 2024, the worst performance since the start of the global pandemic in 2020.
The dire sales come even after Apple slashed its prices in China earlier this year, offering discounts of as much as $180 off the regular retail price.
China is Apple’s third-biggest market – behind the US and Europe – and generated around 17% of its total revenue in the final quarter of 2024.
Poor sales have knocked the tech giant off its perch as the top-selling phone in the crucial Chinese market and its share in the world’s biggest smartphone market fell to 15.7% in the first quarter from 19.7% a year earlier.
A factor in this sales slump is the Chinese government’s crackdown on foreign technology being used in official state agencies and companies.