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A Mastercard debit card from U.K. digital bank Monzo.

Monzo

Monzo on Wednesday said it hit profitability for the first time this year, in a major milestone for one of the U.K.’s most prominent digital banks.

In its annual report for the year ending February 2023, Monzo reported net operating income of £214.5 million ($266.1 million), almost doubling year-over-year from £114 million.

Losses at the bank nevertheless came in at a substantial £116.3 million — though this was slightly lower than the £119 million net loss Monzo reported in 2022.

Still, the company managed to reach profitability in the first two months of the year.

In its annual report, Chief Financial Officer James Davies said Monzo is “now a business with diverse and stabilising revenue from a large, and growing, personal and business customer base.”

“Profitability was always a choice as we balance continuing to invest in growth with profitability,” Monzo’s CEO, TS Anil, told CNBC in an interview. “We could have chosen to be profitable a few quarters ago.”

Monzo is not the first digital bank to hit profitability. Starling Bank reached that milestone for the first time in 2021. Fellow fintech Allica Bank reached monthly profitability last year.

Monzo’s move into the black was largely thanks to a substantial increase in income from newer revenue lines, such as lending and subscriptions. Paid accounts now total 350,000.

Monzo declined to share a figure on how much of a profit it is making currently. The firm said it is on track to reach full-year profitability by the end of 2024.

Lending growth

Monzo’s strong revenue performance was driven by a bumper year for its lending business. This came against a backdrop of pain for U.K. consumers, who’re grappling with a harsh cost-of-living crisis as inflation soars.

Total lending volume reached £759.7 million, almost tripling year-on-year, while net interest income spiked by 382% to £164.2 million.  That was as usage of overdrafts, unsecured personal loans, and the Monzo Flex buy now, pay later service grew sharply.

Yet credit losses also surged dramatically, as the bank set aside a mountain of funds to deal with a sharp climb in anticipated defaults. Credit losses swelled to £101.2 million, a more than sevenfold increase from £14 million in 2022. 

It comes as consumers are increasingly turning to unsecured credit, such as credit cards and personal loans, to offset the impact of the rising cost of living. Research from consulting firm PwC indicates U.K. household debt exceeded £2 trillion for the first time in January.

Monzo’s boss disputed that the cost-of-living crisis had contributed to its revenue performance.

“The cost-of-living crisis was painful for everyone, but it really underscored the ways in which the Monzo product is incredibly powerful,” Anil told CNBC. 

He added the growing cost of living impacted how people used Monzo products, with usage of its savings pots and budgeting tools rising.

Meanwhile, Monzo said it continues to work with the Financial Conduct Authority regulator over an ongoing inquiry into the company’s alleged breaches of anti-money laundering laws.

“We expect it to take time to resolve,” Monzo said. “This could have a negative impact on our financial position, but we won’t know when or what the outcome will be for some time.”

UK ‘not holding us back’

The fintech sector has experienced increasing scrutiny since it grew in prominence after the 2020 Covid outbreak.

Major digital banks, from Revolut to N26, are receiving heightened attention from regulators. Revolut is reportedly set to have its application for a banking license rejected by the Bank of England, according to the Telegraph.

A number of tech bosses have expressed doubts about the U.K.’s bid to become a global tech power on the back of notable setbacks, including Cambridge-based chip design firm Arm’s decision to list in New York rather than London.

Revolut CEO Nik Storonsky earlier this month said his firm had encountered “extreme bureaucracy” in its experience applying for a banking license in the U.K. and said he would never list in the country. Monzo co-founder Tom Blomfield, meanwhile, left London for San Francisco, citing a “much more accepting” environment for tech founders.

“From our perspective, this is a country where we got licensed, this is our home market; we’ve clearly learned this is where we can build a business of scale,” Monzo’s Anil said. “It’s not holding us back, I don’t think of it like that at all.”

Monzo now has 7.4 million customers in the U.K., making it the seventh-largest bank in the U.K. by client numbers. Total customer deposits now stand at £6 billion.

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Tesla accused by NLRB of creating policies to chill workers’ unionizing efforts in Buffalo

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Tesla accused by NLRB of creating policies to chill workers' unionizing efforts in Buffalo

Elon Musk, co-founder of Tesla and SpaceX and owner of X Holdings Corp., speaks at the Milken Institute’s Global Conference at the Beverly Hilton Hotel,on May 6, 2024 in Beverly Hills, California. 

Apu Gomes | Getty Images

Tesla is being accused of taking steps to keep employees in Buffalo, New York, from unionizing, according to a complaint from the National Labor Relations Board.

On Tuesday, the NLRB’s regional director for Buffalo, Linda Leslie, filed the complaint. In it, she said Tesla “promulgated and maintained,” an acceptable use policy for workplace technology in 2023 that was meant to “discourage its employees from forming, joining, or assisting the Union or engaging in other concerted activities,” after allegations were raised by members of Workers United.

CNBC obtained a copy of the complaint through a Freedom of Information Act request.

The policy restricted Tesla workers from “recording, unauthorized solicitating [sic] or promoting,” and “creating channels and distribution lists,” among other things, the complaint said.

The NLRB also claims the policy had the effect of “interfering with, restraining, and coercing employees in the exercise of rights guaranteed” under the National Labor Relations Act, which generally protects workers’ rights to discuss organizing, join a union and collectively negotiate for better pay and working conditions.

The Tesla Buffalo plant was supposed to manufacture solar panels, but has been used more recently to assemble electric vehicle charging equipment, and to house a team of AI software data labelers.

Last month, the Buffalo plant was home to a number of job cuts put in place as part of a broader restructuring at the electric vehicle company. According to a WARN notice filed in the state, Tesla is laying off 285 employees in the state of New York, mostly at the Buffalo factory. The company is eliminating thousands of jobs worldwide after declining EV sales in the first quarter.

Tesla and CEO Elon Musk have clashed with union proponents for years and were found to have engaged in union busting. In 2021, the NLRB decided that Tesla violated labor laws when it fired a union activist, and when Musk wrote on Twitter in 2018: “Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing?”

An administrative court ordered the CEO to remove the post. Tesla challenged the order but its petition for review was denied. The post in question remains on Musk’s X account, where he has 182.7 million listed followers.

Tesla has also faced workers’ rights challenges in Europe. Last year, Swedish service technicians began a strike that continues today, with the labor group allowing for some authorized work to take place at times. The employees in Sweden, where a majority of the workplace is involved in unions, are seeking a collective bargaining agreement with Tesla.

Tesla didn’t immediately respond to a request for comment.

Read the complaint here:

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Apple apologizes for iPad Pro ad showing hydraulic press destroying guitars, piano

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Apple apologizes for iPad Pro ad showing hydraulic press destroying guitars, piano

Apple CEO Tim Cook waves to journalists after his meeting with Indonesian President Joko Widodo at the Presidential Palace in Jakarta, Indonesia, April 17, 2024. 

Willy Kurniawan | Reuters

Apple took on Thursday the unusual step of apologizing for a short advertising video promoting the company’s new iPad Pro tablet after the ad was roundly criticized on social media.

“Our goal is to always celebrate the myriad of ways users express themselves and bring their ideas to life through iPad,” Apple marketing VP Tor Myhren told Ad Age, an advertising trade publication. “We missed the mark with this video, and we’re sorry.”

Apple CEO Tim Cook posted the spot on X, formerly Twitter, on Tuesday. Apple also posted it to YouTube. It showed a variety of creative tools, including a guitar, piano, and metronome being pressed by a hydraulic crusher — like recent viral TikTok videos — until all the objects were compressed into the company’s new tablet.

Apple has also decided not to run the ad on TV, Ad Age said.

The spot provoked derision, including extensive media coverage, as viewers said it made Apple look out of touch, and many posted that the destruction of the creative tools offended them.

Some Apple critics claimed that the negative reaction to the ad, instead of spreading Apple’s marketing message for free, was a sign the company was running out of goodwill among customers. Apple is a major advertiser and has historically been closely linked with TBWAMedia Arts Lab, its longtime ad agency, although it also does some advertising development internally.

It isn’t the first Apple iPad ad in recent years to annoy some customers. In 2018, some people said they were annoyed by an iPad Pro spot in which a child asks, “What’s a computer?”

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TikTok begins automatically labeling AI-generated content

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TikTok begins automatically labeling AI-generated content

The TikTok logo is pictured outside the company’s U.S. head office in Culver City, California, U.S., September 15, 2020. 

Mike Blake | Reuters

TikTok is starting to automatically label videos and images made with artificial intelligence, the company said on Thursday.

AI-generated content on the app will now be tagged with “Content Credentials,” a digital watermarking technology from the Coalition for Content Provenance and Authenticity, TikTok said in a press release.

“Content Credentials attach metadata to content, which we can use to instantly recognize and label [AI-generated content],” TikTok said. “This capability started rolling out today on images and videos, and will be coming to audio-only content soon.”

TikTok already labels content made with its in-app AI effects and requires creators to label any content they produce containing realistic AI. This latest move will expand automatic labeling to AI-generated content uploaded from other platforms.

The update comes as lawmakers and experts warn of the threat AI could pose in the upcoming 2024 election, fearing a rise in deepfakes and misinformation.

TikTok also announced it will join the Content Authenticity Initiative, an Adobe-led group focused on establishing standards to make the digital production of an image, video or audio clip transparent and traceable across the industry.

In February, TikTok was one of 20 leading tech companies that committed to combat AI misinformation in this year’s election cycle. Microsoft, Meta, Google, Amazon and OpenAI also signed the pact.

TikTok’s future in the U.S. is uncertain after President Joe Biden signed legislation in April that gives parent company ByteDance nine months to sell the app or face a ban in the U.S. TikTok has since sued the U.S. government, arguing the law violates the First Amendment.

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