This weeks news includes; Paradise Papers leak, Uber losses employment rights appeal, Musical.ly acquired for $1 billion
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- City A.M asks whether we have created a tech-time bomb as 50% of UK schools do not offer GCSE computer science.
- Bloomberg looks at Tim Draper’s claim that Bitcoin is no bubble. He has a $213 million stake in the cryptocurrency.
- The Independent claims that the anti-corruption drive in Saudi Arabia is doomed to fail.
1. PARADISE PAPERS
A total of 13.8 million documents have been leaked exposing the aggressive tax avoidance schemes of a number of high profile individuals. The Papers were obtained by Süddeutsche Zeitung, a German newspaper who then brought in the International Consortium of Investigative Journalists (ICID) to supervise the investigation. The leaks exposed the complex structures celebrities and wealthy individuals and corporations use to substantially reduce or completely eliminate their tax bills. Some of the big names include Prince Charles, Lord Ashcroft, Louis Hamilton and unsurprisingly Apple.
Roughly 6.8 million of the documents were from Appleby and a corporate service provider Estera. Appleby is deemed to be in the “offshore magic circle” of law firms and boasts of number of multinational clients.
BBC News writes Paradise Papers: Everything you need to know about the leak.
City A.M claims that the Paradise papers did not reveal much that we didn’t already know.
2. SAUDI BILLIONAIRE ARREST
Saudi Arabia arrested dozens of high profile Saudi individuals in an anti-corruption purge. The young prince Mohammed bin Salman launched this crack down arrested 11 princes, four officials and tens of former officials.
Among those arrested was the Billionaire Prince Alwaleed bin Talal, who holds substantial shares in high-profile companies such as Twitter, Citigroup and Time Warner. The news of Alwaleed’s arrest sent shares in these companies falling.
Saudi banks have frozen more than 1,200 accounts belonging to individuals and companies in the kingdom and the number keeps rising. Critics say this purge has nothing to do with corruption and is merely a move by Mohammed bin Salman to stifle any opposition to his power. Supporters however, claim this is much needed justice brought to many of those who have financially exploited the kingdom for years.
These arrests sent shock waves around the business world. Stock markets in the Gulf region fell sharply in response to the news while oil prices on the other hand, rose to $62 a barrel, the highest price since 2015.
Reuters looks at the business impact of these arrests in more detail.
3. UBER LOSES EMPLOYMENT RIGHTS APPEAL
Uber has lost its appeal to prevent its workers being classified as employees. Uber tried to argue that its drivers were in fact self employed because the company does not exercise sufficient control over them and so they are not entitled to particular employment rights such as minimum wage and holiday pay.
The Employment Appeal Tribunal refuted this claim however, judging that drivers worked under employment contracts when they log in to the app, despite the fact that they have no set hours.
Trade unions have labelled the decision as landmark decision. Uber may still appeal further to the Court of Appeal and finally to the Supreme Court. Uber’s appeal to regain its private hire license in London is still on-going.
BBC News looks closer into how the case arose.
On are more positive note, Uber signed a contract with Nasa with a view to develop flying taxi software. The Guardian looks at this contact in greater detail.
4. BROADCOM BID $103 BILLION FOR QUALCOMM
Computer chipmaker Broadcom has announced that it is bidding a staggering $103 billion for rival Qualcomm. If the deal goes through, it would create the largest chipmaker in the world. The deal is contingent upon whether Broadcom completes it $38 billion of NXP Semiconductors.
This is the latest in a number of mergers and acquisitions within the tech sector. Broadcom also is still facing regulatory scrutiny over its $5.9 billion acquisition of Brocade. Qualcomm however, is still locked in a legal dispute with Apple over royal payments for iPhone chips. Many analysts expect the deal to be rejected because it is believed Broadcomm have undervalued Qualcomm.
Check out Reuters’ report for more information on the bid.
5. SSE – N-POWER MERGER
Two of the UK’s big 6 energy companies look set to merge. SSE and N-Power have revealed their plans to merge only shortly after the government released draft legislation to lower costs of consumer energy bills. SSE is the UK’s second largest energy firm had been struggling as it posted an 8% fall in annual operating profit down to £582.6 million. The merger will allow the combined company to be more efficient, saving money for consumers while remaining profitable.
The merger would create a single energy firm with a combined total of over 11 million UK and around 25% of the market share. This will bring it level with British Gas and now the big six will become just five. The Competition and Markets Authority will review the merger once the talks progress.
City A.M’s looks clear at the details of the merger.
6. SNAP LOSSES WIDEN AS SNAPCHAT GLASSES FLOPS
Snap posted losses as it failed to meet growth expectations. For the third quarter Snap posted a net loss of $443m, a loss more than $300 million larger than the same point last year. Its daily active users rose by roughly 25 million to 178 million over the last quarter but this fell short of expectations.
Snap launched its snapchat glasses last September but having sold only 150,000 it is pulling the plug on production. This failed project will cost snap roughly $40 million loss. Snap blamed cancelled orders and excess inventory for these results while critics had blamed the $129 retail price as well as the poor quality of the product itself. (BBC News)
Shares in Snap fell by 16% in response to news as pressure mounts on the tech unicorn.
7. MUSICAL.LY ACQUIRED FOR $1 BILLION
Musical.ly has been acquired by Bytedance for nearly $1 billion. Musical.ly is the first Chinese social media app to hit real success in the West. Musical.ly is an app where users can record, edit and share videos of themselves lip syncing to funny videos and popular songs. The app current has over 60 million monthly users.
Bytedance is a Chinese tech company which makes mobile apps, and is valued by some at $20 billion.
BBC News looks closer at the acquisition.
8. ASLEF REACHES TRAIN DEAL
Train drivers from the union Aslef has accepted a deal with Southern rail, bringing a close to the 18 month dispute. This the third package offer to drivers and 79.1% of members voted to accept the deal. Train drivers will now receive a 28.5% pay rise over the next 5 years. The deal also requires Southern to allocate a second safety-trained worker on every Driver Only Operated trains.
The Rail Maritime and Transport (RMT) Union criticised the deal and its drivers went ahead with its planned 48 hour strike on Wednesday.
City A.M looks at the deal.
9. AVAST PREPARES FOR £3 BILLION IPO
Antivirus software company Avast is exploring an initial public offering. It has hired Rothschild to prepare the company for this and many analysts value the company at up to £3 billion.
Avast is seriously considering listing on the London Stock Exchange and would make it the largest IPO in history. Many companies however, consider IPO’s but ultimately choose to offer private equity instead. Both Pure Gym and TMF Group have cancelled floatation plans in favour of private sales.
Avast pulled out of its planned IPO on Nasdaq in 2011 due to challenging market conditions.
Read Reuters report for more information.
10. LIDL BECOMES HIGHEST-PAYING SUPERMARKET
Lidl has increased wages of 16,000 workers to become the UK’s highest-paying supermarket. Entry-level pay at the German retailer has risen from £8.45 to £8.75 per hour outside of London & £9.75 to £10.20 per hour in London. The pay rise will cost over £3.5 million and will apply from the 1st of March 2018.
City A.M looks further at the reaction to this pay rise.