This week’s news includes; Facebook in personal data crisis, Trump imposes new tariffs, Amazon becomes second most valuable company in US.
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:
- The Guardian asks whether Spotify and Dropbox can finally prove that tech is a sound investment.
- Sky News looks at why bigger banks face tougher stress tests
- Law students need to stop waiting for that Suits moment. (Legal Cheek)
- Bloomberg “ Spotify Saved Music. Can it Save Itself?”
1. FACEBOOK’S DATA DISASTER
Facebook is in a data privacy crisis. The tech giants share price has been crashing, falling 6.8% on Monday alone. Over $60 billion was wiped off Facebook’s market value in just 2 days. Mark Zuckerburg has been summoned by a UK parliamentary committee and the FTC has launched a probe (Bloomberg). But just what has gone wrong?
The problem stemmed from its relationship with a company called Cambridge Analytica (CA). CA worked on Donald Trump’s election campaign and allegedly used personal data to influence the election. A sting operation gained evidence of violations of data privacy protection. CA had gathered data from 270,000 users who participated in a personality test on Facebook but also public data from their friends. Data from a total of 50 million users was harvested. Once users had been psychologically profiled, their Facebook feeds would then be filled with pro-Trump propaganda. The fundamental issue was that the vast majority of data collected was not consensually gained. Users were never informed that their data would be shared with Donald Trump’s election campaign.
Both Facebook and Cambridge Analytica both deny any wrongdoing. In addition, Facebook has changed its data harvesting policies a few years ago. (BBC News)
The full scale of the issue is still unfolding and we are just seeing the beginning. The growth in the harvesting of personal data has outpaced regulatory controls by some distance. The General Data Protection Regulation comes into force in May 2018 and seeks to address some of these issues. This incident however, will provide even greater impetus for a global crackdown on the tech companies that hold so much personal information.
2. TRUMPS TARIFFS
Donald Trump has imposed his tariffs on imported metals and rattled global markets. The USA has announced some key exemptions from Trump’s metal tariffs. The European Union, Argentina, Australia, Brazil, Canada, Mexico and South Korea will all be exempted. Donald Trump announced a 25% tariff on imported steel and 10% on aluminium.
China has made it clear that it will retaliate as necessary and fears of a full scale trade war are mounting. China announced that will impose tariffs on 128 US products amounting to $3 billion worth of goods.(CNN) The US’ tariffs on China alone are estimated to amount to $50 billion.
This is worrying news for markets and retailers. 25 US retailers have banded together to ask Trump to reconsider the measures. These retailers included Walmart, Target and Costco, all of whom heavily rely on imported goods. Both US and China stock markets were down in response to the news. As with all trade wars however, the consumers will undoubtedly suffer most. BBC News analyses the exemption and the potential effects of a trade war.
A driverless Uber vehicle has killed a woman in Arizona. The woman was crossing road when she was struck by the vehicle. There was a person behind the wheel but the car was in autonomous mode.
Uber has stated that it is cooperating with local authority to investigate the incident. This is the first fatal collision involving autonomous cars. Uber has now halted all self-driving tests. Friends and family of the victim have asserted that Uber should be criminally liable for her death. Toyota also suspending driverless car tests in response to the news. (BBC News)
This is incident likely to make manufacturers ensure better safety technology are in place before testing on public roads. This is another big issue for Uber. The company was blighted by scandals in 2017 and suffered a loss of $4.5 billion despite rising revenues.
Will Uber bounce back from this as a company? Our insight article takes a wider look at Uber, exploring the very sustainability their employment model.
4. INTEREST RATES
Interest rates in UK remained unchanged but hikes in the US have rattled the markets. The Bank of England voted 7-2 to keep interest rates at 0.5%. Interest rates were raised in November from their record low of 0.25%. The bank chose to leave rates as a rise could have a negative impact on inflation The rate of annual inflation fell from 3% to 2.7% , partially due to a slight fall in fuel prices. In addition, sterling has risen up to $1.40 which has increased consumer purchasing power. The bank of England has a target rate of 2% so the recent figures appear a step in the right direction. (BBC News)
On the other hand, the US economy is doing better than expected. The Federal Reverse voted to raise interest rates to a range of 1.5% to 1.75%. They have also made clear signals that there will be two more rate hikes this year. (City A.M)
5. GVC LADBROKES MERGER GETS GREEN LIGHT
The Competition and Markets Authority (CMA) has given the green light to GVC’s £4 billion acquisition of Ladbrokes Coral. The CMA deemed that the two companies were not in close enough rival to harm market competition.
This deal follows the trend of consolidation in the gambling industry. There has been serious regulatory crackdown on the sector so mergers are likely to become even more common.
GVC owns the brands, bwin, sportingbet and Foxy Bing. Ladbrokes acquired Gala Coral in late 2016 to form the company Ladbrokes Coral. (The Independent)
6. GOOGLE FIGHTS FAKE NEWS
Google has announced a $300 million investment in the fight against fake news. It will be creating new technology to help weed out fake news. This will include alteration in its algorithms to identify misinformation.
Google will also spend some of the money to help news organisations develop their own systems. It has also created a new project to help news readers identify fake news. This project was set up with Stanford University called MediaWise. Google has come under heavy fire for failing to deal with fake news and advertisers have voted with their feet.
BBC News analyses the advertising industry in more detail.
Amazon is now the second most valuable publicly listed company in the US. The tech giant overtook Alphabet, the parent company of Google, as its market cap reached $768 billion. Alphabet’s share price has been reeling over the past week due to the Facebook/Cambridge Analytica scandal. This scandal sparked market fears of a crack down on tech and its market cap fell to $762 billion.
The only company standing in the way of Amazon is Apple. Amazon however, is growing significantly faster than Apple with an 81% rise in share price over the past year. Analysts has stated that Amazon could become the world’s first $1 trillion public company by August 2018.
Earlier this year, they announced they were launching their own healthcare company with JP Morgan and Berkshire Hathaway. In addition, they recently bought smart doorbell maker Ring for $1 billion. This could potentially allow Amazon to drop deliveries directly in the customers houses as users can authorise entry using Ring. Jeff Bezo’s is on a mission and shows no signs of slowing down. (Reuters)
8. BMW EMISSIONS RAID
Last week, BMW’s Headquarters in Munich were raided by police. Last month, police announced that they would launch a fraud investigation into an alleged use of a cheat device.
The offices were raided by over 100 law enforcement agents. Prosecutors claim that 11400 vehicles had software “erroneously allocated” to them. BMW has however, stated that prosecutors investigation had not found evidence of “targeted manipulation” through such software.
The emission scandal initially broke in 2015 when Volkswagen admitted to fitting defeat devices to some vehicles. This allowed it to cheat on US diesel engine emission. Investigations into other car makers have taken place but no breaches as serious as Volkswagen’s have been found. (BBC News)
9. US BANS TRADING OF VENEZUELAN CRYPTO
Donald Trump has made it unlawful for US citizens to trade Petro. Trump signed an executive order to ban trading of the cryptocurrency released by the Venezuelan government last month. Each petro coin is backed by one barrel of Venezuelan oil. Many saw the launch of a Cryptocurrency as a means to bypass US sanctions in a bid to rescue its faltering economy. As a result, this move by Trump was highly expected. Venezuela’s rate of inflation hit 800% last year. (City A.M)
The Economist asks whether Venezuela’s crypto-currency is salvation or scam.
10. WHIPLASH CLAIMS
The UK government has introduced new curbs on whiplash claims. The plans will change the way claims are calculated and set fixed amount of compensation. Whiplash claims will also not be settled without medical evidence.
The road traffic accident claims industry has been described as “predatory” and whiplash claims have long been at the centre of this. Claiming whiplash is seen as easy money due to medical difficulty in proving or disproving it. It is estimated that is costing drivers £1 billion a year. This measure comes at a time where drivers are paying notably more for their insurance than ever before. The new curbs will see all UK drivers save £35 a year on insurance premiums.
The Guardian looks at the measure in more detail.