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Netflix will work with Microsoft to launch a cheaper subscription plan that includes advertisements, the firms said Wednesday, as the streaming giant fights to attract customers.

Netflix opted to develop the lower-cost offering after a disappointing first quarter in which it lost subscribers for the first time in a decade, and after years of resistance against the very idea of running ads. 

The ad-supported subscription will be in addition to the three options already available, the cheapest being $10 per month in the United States.

Microsoft will be responsible for designing and managing the platform for advertisers who want to serve ads to Netflix users. 

“It’s very early days and we have much to work through,” Greg Peters, Netflix’s chief operating officer, said in a statement. 

Microsoft added that advertisers “will have access to the Netflix audience and premium connected TV inventory.”

Adding advertising means Netflix will expose itself to some thorny issues, including debates around consumers’ personal data being harvested on a massive scale to target them with more lucrative, personalized pitches. 

Analysts were not surprised by Netflix’s choice in Microsoft because it offers fewer conflicts of interest for Netflix than some other companies.

“Unlike the top three ad sellers in Google, Meta, and Amazon, Microsoft hasn’t pushed competing streaming products,” wrote analyst Ross Benes.

After years of amassing subscribers, Netflix lost 200,000 customers worldwide in the first quarter compared to the end of 2021, which sent its share plunging. 

The streaming giant reacted by announcing the arrival of advertising on the service, with the aim to finance the investments necessary to maintain its position as leader in the industry that it launched. 

Netflix indicated it would get tougher on sharing logins and passwords, which allow many people not to pay to access the platform’s content. 

The number of unionization campaigns has jumped in the 2022 fiscal year, according to federal data released Wednesday, reflecting how the tight US labor market has created opportunity for organized labor. 

Through the first three quarters of fiscal 2022 — from October 1 to June 30 — there were 1,935 unionization campaigns filed with the National Labor Relations Board, up 56 percent from the prior year.

The surge in union drives has been a feature of the Covid-19-era US economy, which has also seen an uptick in strikes at John Deere, Kellogg’s and elsewhere amid dissatisfaction with labor conditions and pay levels.

Campaigners have won elections at more than 100 Starbucks stores. Labor also prevailed in a hard-fought election at an Amazon warehouse in April, although Amazon has contested the vote.

These efforts have raised hopes of a possible reversal in the long-running decline of US unionization since the 1980s. The rate fell to 10.3 percent in 2021, with an even lower percent of the private sector unionized.

The NLRB said it is also seeing an uptick in unfair labor practice charges, which are up 14.5 percent, with more union campaigns prompting accusations of violations by employers. 

That increase is posing challenges for the agency, which has had a flat budget since 2010, translating into a 25 percent drop when adjusted for inflation. Overall staffing is down 39 percent since 2002, the NLRB said in a news release.

“The NLRB is processing the most cases it has seen in years with the lowest staffing levels in the past six decades,” said NLRB General Counsel Jennifer Abruzzo. 

“The Agency urgently needs more resources to process petitions and conduct elections, investigate unfair labor practice charges, and obtain full remedies for workers whose labor rights have been violated.”

Global stocks fell Wednesday and the euro dipped below $1.00 for the first time in nearly 20 years after data showed a surge in US inflation last month, convincing investors that further increases in borrowing costs are on their way.

Stock prices on Wall Street retreated after a sharp uptick in US inflation to 9.1 percent in June increased the risk of a possible recession. 

The broad-based S&P 500 finished down 0.5 percent.

European stock markets also ended the session lower, while the euro fell below the symbolic level of $1.00 for the first time since December 2002, dipping as low as $.0998, as the prospect of higher interest rates rendered the dollar more attractive to investors. But it soon moved back above parity.

The economic prospects for the 19-country eurozone are also darkening as a possible halt to Russian gas supplies increases the risk of recession.

– Inflation tops 9% – 

US inflation surged to a 40-year high in June on a 12-month basis, much worse than expected, US Labor Department data showed.

Beyond the hit to consumption from high prices, analysts worry the report will prompt the Federal Reserve to adopt even tougher measures to tighten monetary policy, such as a full percentage point interest rate increase at the July 27 meeting.

On Wednesday, Canada’s central bank took that step, raising its lending rate to 2.5 percent.

Oanda’s Edward Moya said that he still expects the Fed to hike 75 basis points in July, “but a strong case could be made for a full-point increase,” according to a note Wednesday.

Consumer prices are soaring worldwide after economies reopened from pandemic lockdowns and as the Ukraine war keeps energy prices elevated.

In a further sign of the pressure being felt around the world, the New Zealand and South Korean central banks each raised interest rates by 0.5 percentage points Wednesday.

It was the steepest increase by Seoul since 1999.

– Europe gas crisis –

Russian energy giant Gazprom said it could not guarantee the good functioning of the Nord Stream gas pipeline and did not know if a “critical” turbine engine would be returned from repair in Canada. 

Gazprom started 10 days of maintenance on Nord Stream 1 pipeline on Monday, with the EU — particularly gas-reliant Germany — waiting nervously to see if the taps will be turned back on. 

“A prolonged cut to the gas supply would halt a lot of economic activity, sending (Germany) deep into recession,” said Tapas Strickland at National Australia Bank.

July 21 — when the gas should be switched back on — will be a crucial date, he said.

– Key figures at around 2030 GMT –

New York – Dow: DOWN 0.7 percent at 30,772.79 (close)

New York – S&P 500: DOWN 0.5 percent at 3,801.78 (close)

New York – Nasdaq: DOWN 0.2 percent at 11,247.58 (close)

London – FTSE 100: DOWN 0.7 percent at 7,156.37 (close)

Frankfurt – DAX: DOWN 1.2 percent at 12,756,32 (close)

Paris – CAC 40: DOWN 0.7 percent at 6,000.24 (close)

EURO STOXX 50: DOWN 1.0 percent at 3,453.97 (close)

Tokyo – Nikkei 225: UP 0.5 percent at 26,478.77 (close)

Hong Kong – Hang Seng Index: DOWN 0.2 percent at 20,797.95 (close)

Shanghai – Composite: UP 0.1 percent at 3,284.29 (close)

Euro/dollar: UP at $1.0061 from $1.0037 Tuesday

Pound/dollar: UP at $1.1893 from $1.1889 

Euro/pound: UP at 84.59 pence from 84.43 pence

Dollar/yen: UP at 137.36 yen from 136.68 yen

West Texas Intermediate: UP 0.5 percent at $96.30 per barrel

Brent North Sea crude: UP 0.1 percent at $99.57 per barrel

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US inflation surged to a fresh peak of 9.1 percent in June, further squeezing American families and heaping pressure on President Joe Biden, whose approval ratings have taken a battering from the relentless rise in prices. 

Government data released Wednesday showed a sharp, faster-than-expected increase in the consumer price index compared to May driven by significant increases in gasoline prices.

The 9.1 percent CPI spike over the past 12 months to June was the fastest increase since November 1981, the Labor Department reported.

Energy contributed half of the monthly increase, as gasoline jumped 11.2 percent last month and a staggering 59.9 percent over the past year. Overall energy prices posted their biggest annual increase since April 1980.

While acknowledging the inflation rate was “unacceptably high,” Biden argued that it was “out of date” as it did not reflect a clear drop in energy prices since mid-June.

According to AAA, the national average price at the pump was down to $4.63 a gallon, from $5.01 a month ago.

The recent price drop had provided “important breathing room for American families. And, other commodities like wheat have fallen sharply since this report,” the president said in a statement.

Insisting that tackling inflation was the top priority, Biden admitted his administration needed “to make more progress, more quickly, in getting price increases under control.”

The war in Ukraine has pushed global energy and food prices higher, and US gas prices at the pump last month hit a record of more than $5 a gallon. 

However, energy prices have eased in recent weeks, with oil prices falling below $100 a barrel for the first time since April, which could start to relieve some of the pressure on consumers.

The Federal Reserve is likely to continue its aggressive interest rate increases as it tries to tamp down the price surge by cooling demand before inflation becomes entrenched.

The US central bank last month implemented the biggest rate hike in nearly 30 years, and economists say another three-quarter-point increase is likely later this month.

Wall Street stocks declined Wednesday after the release of the report, which added to recession fears, and some analysts worry the report will prompt the Fed to adopt even tougher measures to tighten monetary policy, such as a full percentage point interest rate increase.

Ian Shepherdson of Pantheon Macroeconomics summed up the data in one word: “Ouch.” 

“This report will make for very uncomfortable reading at the Fed,” he said. “It rules out the chance of the Fed hiking by only 50bp this month.”

– Signs of cooling? –

Driven by record-high gasoline prices, the consumer price index jumped 1.3 percent in June compared to May.

But Shepherdson noted some signs of cooling prices in the data and predicted “this will be the last big increase.”

When volatile food and energy prices are stripped out of the calculation, “core” CPI increased 5.9 percent over the past year — still a rapid pace but slowing from the pace in May, according to the data. 

Food and housing prices also rose in June, as did car prices, though the rate has stabilized or slowed from the past month, the report said.

Mickey Levy of Berenberg Capital Markets said the “broadening” of price increases to more categories is a “cause for concern” for the Fed’s efforts, but “there is reason to believe price increases may moderate in the near term.”

Even so, the big jump left Biden open to intense criticism from opposition Republicans, who blamed Democrats’ spending.

Even Democratic Senator Joe Manchin of West Virginia accused leaders in Washington of ignoring the inflation risk.

“No matter what spending aspirations some in Congress may have, it is clear to anyone who visits a grocery store or a gas station that we cannot add any more fuel to this inflation fire,” Manchin said in a statement.