This week’s news includes; GDPR complaints roll in, Spotify settlement with artists, Samsung breaches Apple patent and M&S store closures
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 claims that after Carillion, breaking up the Big Four is not the answer.
- BBC News asks could smartphones replace bank branches?
- The Independent asks what is really wrong with the UK retail sector and why is it in such trouble?
1. GDPR COMPLAINTS
The General Data Protection regulation came into force last Friday. The first official non-compliance complaints under GDPR were filed against Facebook and Google, also on Friday. The complaint was lodged by consumer rights group Noyb, chaired by data privacy activist Max Schrems. Schrems had previously won a legal battle preventing data transfers from the US to EU due to inadequate protections under the “safe harbour” agreement.
The complaints relate to Facebook, WhatsApp and Android OS. Noyb allege that users are forced to agree to new terms to use the service, contravening the new regulation. The GDPR stipulates that consent must be given “freely”. User must either consent to the new terms or delete their account. The complaints are likely to be investigated by the regulatory authorities. If the regulator deems this a substantial contravention of the law, both Facebook and Google can faced fines of up to £3 billion each. It is safe to say that GDPR has hit the ground running. Read The Guardian’s report for more on the complaint.
Find out more about GDPR in our summary.
2. SPOTIFY ROYALTY SETTLEMENT
Spotify has agreed a $112 million (£84m) settlement deal with song writers. Writers alleged that they had been inadequately paid and a class action lawsuit was launched. Spotify has been seeking to finalise the settlement since May 2017. The £84 million that Spotify will pay is comprised of £43.5m cash and existing unpaid royalties. This settlement however, is insignificant in comparison to the $1.6 billion lawsuit it faces from Wixen. The music publisher claims Spotify used artists songs without a license or paying song writers. Making matters worse, YouTube has launched it’s own streaming service which could eat into Spotify’s 70 million subscribers. (The Independent)
Music week explains why the fight for streaming market leadership is great news for the music biz.
3. BARCLAYS QATAR CASE COLLAPSES
The UK crown Court has dismissed a case against Barclays. This was the first legal proceedings brought against British banks for their conduct in the financial crisis. But, this is because Barclays was one of the only major banks that did not require a government bailout in 2008. It transpired that Barclays had taken out a £12 billion loan from the Qatari government. Barclays then loaned £2.3 billion back to the Qatari. The SFO alleged that this money would have been directly or indirectly used to buy Barclays shares, which constitutes unlawful financial assistance.
This case was hugely significant as had Barclays lost this case it may have lost its banking license. The SFO is still expected to appeal the decision. Four executives are however, still under face criminal fraud charges, with trials to begin in 2019. (BBC News)
4. SAMSUNG PATENT BREACH
Samsung has been ordered to pay Apple $539 million for copying Apple’s technology. Most of the damages payment – $533.3m – was awarded for infringing three Apple design patents. The remainder was for violating two patented functions. This legal battle has been ongoing since 2011.
A Court initially ruled that Samsung should pay $1 billion to Apple in 2012. The Appeal court rejected this and asserted that Apple could not legally protect the appearance of the iPhone. Samsung contested that it should only pay $28 million for parts used. It argued against paying damages for profits Apple would have realised had the breach not occurred. The outcome of this case is hugely ironic. Much of Samsung’s recent advertising campaign has been about Apple copying Samsung’s technology, years after Samsung released it. Now it appears that the opposite may be the case.
Read Sky News report for more reactions.
5. SONY ACQUIRES EMI MUSIC
Sony has acquired a $1.7 billion controlling stake in EMI music publishing. Sony previously had a 30% stake but this will now rise to 90%. EMI boasts the Beatles and Pharrell Williams in its back catalogue.
Sony is failing to achieve a strong position in many of its chosen markets, most notably, in it’s smartphone business. The company is now seeking new and improved revenue streams, particularly from its entertainment business. Its EMI acquisition follows its purchase of Peanut Holdings, creators of Snoopy and Charlie, for $1.6 billion. Despite this, profits have been strong recently as it posted an almost 700% rise in profits to $4.5 billion for the year to March 2018. (Sky News)
6. UK ECONOMY
The UK economy is struggling again. The Office for National Statistics revealed GDP for the first quarter grew by a meagre 0.1%. This poor growth has discouraged the Bank of England from raising interest rates from their current 0.5%. This is in spite of inflation falling to 2.4%, steadily closer to its 2% target. While many sectors blamed the “beast from the East” for poor sales, the ONS suggests that this had minimal impact. Consumer confidence in general is slumping and this is having a significant effect on national output.
7. DEUTSCHE BANK SLASHES JOBS
Deutsche Bank has announced that it will be cutting 7,000 jobs globally. This comes as part of move to save €50 billion and return to profits. Over 25% of its equities sales and trading workforce will be cut. The bank will also reduce exposure to leverage. These cuts were anticipated when the new CEO, Christian Sewing was appointed last month. Former CEO John Cryan was fired last month after consistently poor results. In February the bank reported a loss of €500m (£436m) for 2017. The bank currently employs 97,000 people worldwide.
8. NETFLIX MARKET CAP
Netflix temporarily surpassed Disney to become the world’s largest media company by market cap. Netflix shares rose 1.3% to take it to $151.8 billion. In just under 4 years Netflix’s market cap has risen by over 750%. Investors are confident about the future of the online media service. It has been adding users rapidly and currently has over 125 million users worldwide. While the market cap soars, Netflix is still far behind Disney in terms of revenue. Disney boasted turnover of over $55 billion last year, compared to Netflix’s $16.1 billion. Netflix is a growing threat to traditional media companies. Two weeks ago, BBC, ITV and Channel 4 announced they would be exploring a streaming service to prevent Netflix eating into it’s user base.
9. M&S STORE CLOSURES
Marks and Spencer’s has announced that it will be closing 100 stores over four years. This comes as part of plan to shift the business towards online sales. M&S will have larger stores with homeware goods but in far fewer locations. 21 stores have already closed and 14 further closures have been confirmed for July 2018.
M&S is the largest fashion retailer in the UK but increased competition is putting it under mounting pressure. M&S currently has over 1000 stores but these closures have been described as vital for the company’s survival. Its market share has fallen by 30% in the past 10 years.
Read BBC News’ report for further analysis and to see what stores are closing.
10. TESCO DIRECT CLOSURES
Tesco has announced that it will shut down its Tesco Direct online service. Customers could purchase non-food home goods on Tesco Direct. Increasing marketing and delivery costs meant that the business was no longer sustainable as an independent company, according to Tesco. It has also been struggling to compete with Amazon.
The website will close on the 9th of July. It will also shut down its Milton Keynes based distribution centre in August and leaves 500 workers at risk of redundancy. Tesco.com will still be available as normal.
This is another step in Tesco’s long road back to profitability. Find out more about Tesco in our company watch section.
