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In a landmark U.K. class action antitrust trial, Apple's newly appointed chief financial officer, Kevan Parekh, has refuted allegations that the App Store enjoys profit margins of around 75%. He said: "I wouldn't say they're accurate," in response to claims made by barrister Michael Armitage, who cited evidence from U.S. litigation suggesting high operating margins. The £1.5bn ($1.8bn) case, led by class representative Rachael Kent, accuses Apple of monopolistic practices by compelling developers to use its App Store for app distribution. The claimants argue that the "excessive and unfair" commissions charged by Apple are ultimately passed on to consumers. Apple, however, contends that its integrated system offers significant benefits and faces intense competition in the market. London's City AM notes that there are over 20 class actions now active in the U.K. against Apple, Google and its parent firm Alphabet, Microsoft and Meta, with an estimated total of more than £30bn ($36bn) in alleged damages.

 

Financial Times

Techarati

City AM

Reuters reports that advertisers who depend on TikTok as a key digital marketing tool are preparing contingency plans amid a dawning realization that the popular Chinese-owned social media platform may not be saved before a U.S. ban takes effect on Sunday. "It seemed unbelievable even as of just a few weeks ago to imagine that there would be no TikTok," said Kerry Perse, the former head of social media at Omnicom Group's media agency OMD. "We all thought that any access issues to the TikTok app would be slow and drawn-out," she said. The ByteDance-owned app plans to shut U.S. operations on Sunday unless it gets a last-minute reprieve, Reuters reported on Wednesday.

 

Reuters

Mandi McReynolds and Jill Klindt, chief sustainability officer and chief financial officer at reporting software firm Workiva, write in ESG Dive on how the responsibilities of CSOs and CFOs are expanding amid increasing global sustainability pressures and the growing prominence of artificial intelligence. They note the importance of sustainable business integration and advise CSOs to pivot from compliance to proactive leadership. They also cite recent surveys by their firm which found that 97% of executives believe integrating financial and ESG data helps to identify growth opportunities, while 88% of investors favor firms that follow this practice.

 

ESG Dive

Refrigerated-storage firm Lineage has announced that it is cutting staff, as food manufacturers and retailers working through excess inventories amid reduced demand. The logistics firm, which has counted Kraft Heinz, Darden Restaurants and Walmart among its clients, said: “As part of a comprehensive review of our operations, we have made the difficult decision to reduce certain positions within the company. While this step was not taken lightly, it is essential to protect our long-term success and adaptability.”

 

Wall Street Journal

The cost of imported goods rose 0.1% in December, and by 2.2% on an annual basis, according to the Labor Department, in line with expectations. Imported fuel prices jumped 1.4% in December, the most since last April, after rising 0.9% in November. Higher costs for natural gas and petroleum accounted for the increase in fuel prices. Food prices shot up 2.8% after advancing 1.4% in November. Excluding fuels and food, import prices fell 0.2%. Relatedly, U.S. business inventories grew 0.1% in November, according to the Commerce Department, and were up 2.6% on an annual basis. Retail inventories excluding autos, which go into the calculation of GDP, increased 0.5%. Business sales rose 0.5% in November after being unchanged in October. At November's sales pace, it would take 1.37 months for businesses to clear shelves.

 

Market Watch

Reuters

Reuters

Private equity firm KKR & Co is facing a civil lawsuit for allegedly avoiding antitrust scrutiny in at least 16 deals between 2021 and 2022. Justice Department official Doha Mekki said that “Through document omissions, alterations, and failures to report deals, KKR threatened the integrity of the (Antitrust) Division’s premerger reviews and, in some cases, obscured the market impact of its deals and serial acquisitions." KKR noted in response that “Not a single alleged ‘error’ was material to or interfered with any merger review."

 

Reuters

The IRS has proposed new regulations requiring multiyear tax reporting for corporate separations and related transactions. According to the proposed rules (REG-116085-23, RIN 1545-BR00), the information reported will help establish whether these transactions qualify for nonrecognition treatment under subchapter C of the Internal Revenue Code. The changes will impact corporations, shareholders, and security holders.

 

Bloomberg Tax

Paul Munter, chief Accountant at the SEC, will retire on January 24th, shortly after President-elect Donald Trump's inauguration. Mr. Munter, who has been with the SEC since 2019 and became chief accountant in January 2023, is known for his outspoken views on financial reporting issues. His tenure included significant oversight of the FASB and the PCAOB. He raised concerns about the accounting industry's challenges, particularly regarding crypto companies misrepresenting reviews as audits. Mr. Munter emphasized the need for professionalism in accounting, warning against a mindset that undermines confidence in the profession. He previously worked at KPMG and holds a Ph.D. in accounting from the University of Colorado.

 

CFO DIve

Baker Tilly U.S. LLP has been fined $500,000 by the PCAOB for failing to meet quality control standards during audits in 2018 and 2019. The PCAOB's inspections revealed significant deficiencies in the firm's testing of internal controls and accounting estimates. Despite being informed of these issues, Baker Tilly did not implement effective changes to its engagement performance. PCAOB chair Erica Williams stated, "Deficient quality control systems put investors at risk," emphasizing the board's commitment to holding firms accountable. Baker Tilly has agreed to a disciplinary order, which includes hiring an independent consultant to review its quality control policies and providing training for its audit staff.

 

Accounting Today

Target has lifted its comparable sales growth forecast for the fourth quarter through January to 1.5% from prior expectations of flat growth, boosted by strong demand for clothing, toys and beauty products during November and December. In the combined months of November and December, the Minneapolis-based retailer said total sales increased 2.8% and comparable sales rose 2% year over year. Digital sales grew nearly 9% compared with the year-ago holiday period. It added that Black Friday and Cyber Monday saw record-high sales. “Our team delivered continued traffic growth and better-than-expected holiday-season performance, thanks to their focus on serving guests with an inspiring, easy and joyous shopping experience", chief executive Brian Cornell said. Target also announced several changes to its leadership team, including the retirement of chief stores officer Mark Schindele, to be replaced by Adrienne Costanzo, senior vice president of store operations. Additionally, chief information office Brett Craig is stepping down, with chief digital and product officer Prat Vemana to replace him.

 

US News and World Report

CNBC

Minneapolis Star Tribune

Wall Street Journal

Craft supplies and fabric retailer Joann has filed for Chapter 11 bankruptcy protection for the second time in less than a year, facing $615m in liabilities and struggling with declining sales and inventory shortages. Interim chief executive Michael Prendergast said: “The last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step". Despite the bankruptcy, Joann's over 800 stores and websites will remain open, and employees will continue to receive pay and benefits. Subject to court approval, Gordon Brothers Retail Partners will act as the stalking-horse bidder in the asset sale process. The company has faced challenges such as competition from rivals like Michael's and Etsy, and inconsistent deliveries from suppliers. That left gaps in product lines and a smaller selection of premium fabrics and textiles.

 

New Jersey Herald

Los Angeles Times

Washington Post

Wall Street Journal

Lawyers representing 73 Swiss banks seeking to avoid a tax-evasion probe by U.S. authorities wrote a letter to the U.S. Department of Justice raising questions over a dozen demands, including the banks' cooperation with other nations. The letter, dated December 21st, asks the U.S. to discuss issues which present substantial obstacles to their clients’ ability to "cooperate fully with . . . any other domestic or foreign law enforcement agency designated by the Department,” among a wide range of other changes. "This requirement is not found in the Program and, indeed, turns a Program specifically focused on U.S. tax issues into a global cooperation agreement without any safeguards or guarantees of appropriate consideration of the banks’ cooperation," the document argued.

 

Reuters