This week’s news includes; Global trade war tensions increase, memes safe from EU legislation, Facebook personal data crisis continues, Credit Suisse Chinese corruption
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:
- eFinancial Careers “How to network with all the charisma of Wall Street Banker”
- The Boar “ What’s is behind the unstoppable success of luxury fashion?”
- City A.M “What’s the difference between emerging and frontier markets?”
1. GLOBAL TRADE WAR
The US has imposed new tariffs on Chinese imports as trade war tensions escalate. The tariffs came into effect last week and affect $34 billion worth of goods. China responded with its own 25% tariff on $34 billion worth of US goods.
This trade war shows no sign of ending as Trump has threatened tariffs on $500 billion worth of goods. This is the total value of all Chinese imports last year. President Trump claims these are all necessary measures to protect US jobs and stop Chinese theft of US intellectual property.
China’s commerce ministry has filed a complaint with World Trade Organisation (WTO) claiming that the US is starting the “largest trade war In economic history”. Russia has also imposed retaliatory tariffs on the US. (BBC News)
BBC News details how a US-China trade war could hurt us all.
2. MEMES SAFE FROM EU
The European Parliament has rejected fast-tracking the new controversial copyright directive. The directive would hold online platforms liable if users upload unlicensed content. In order for users to share content which is copyrighted, they must pay a license fee or the content must be filtered/censored by the platform.
In addition, the directive introduces a “link tax”. The tax requires aggregators such as Facebook and Google to buy licenses to publish links to news organisations. This is largely to protect the traditional news outlets who are struggling with falling ad revenue. Many outlets which were once wholly free such as Bloomberg and Wall Street Journal, are now turning to paid subscriptions to cope with this slump.
Advocates of the legislation argue that the directive will allow writers and artists to be fairly compensated for their work. Photographers currently take pictures that may become viral memes but they receive nothing for this publicity. Critics have argued that this measure would destroy the internet as we know it and undermine freedom of expression.
318 MEP’s rejected the legislation. 278 voted in favour and 21 abstained. The legislation will be amended and the debate will be reopened. The next vote will take place on 10th September. (Sky News)
3. FACEBOOK DATA SHARING
The data scandal at Facebook continues as it emerges 61 companies were given special access to user data. Companies such as Apple, Spotify, Amazon and UPS were all granted extensions on data sharing freedoms. These companies were granted access to user data to improve Facebook integration features in their services.
Despite stricter controls introduced in 2013, these extensions directly contradict Facebook’s statement that data sharing had been closed down in 2014. These statements arose from the Cambridge Analytica scandal earlier this year where 87 million users were affected by a data breach. The special privileges in question were granted to 52 companies. Only 38 of those arrangements have ended but 14 have not. It is safe to that the data scandal is far from over. (Sky News)
4. TESCO’S STRATEGIC ALLIANCE
Tesco has formed a strategic alliance with French supermarket Carrefour. The move is expected to cut prices for consumers as supermarket price wars rage both sides of the channel. Asda recently agreed a merger with Sainsbury’s which will see prices drop by 10%. Lidl and Aldi have been growing rapidly. Tesco is fighting hard to retain its title as largest UK supermarket and climb out of the financial hole it was in. The alliance will see the companies offer each other’s own brand products. They will also work together strategically when striking deals with suppliers.
Understandably, this agreement has raised serious concerns for suppliers who be squeezed by this alliance. Suppliers’ negotiating positions will be weakened as this deal ties up two industry behemoths. They have combined revenue of over £135 billion and employ over 800,000 people. BBC News analyses the deal in greater depth.
To learn more about Tesco and the challenges facing the company view their section on our company watch page.
5. UK HIGH STREET JOB LOSSES
In 2018 so far, over 50,000 jobs have been lost on the UK’s high streets. June was a particularly challenging month for the sector. Over 11,000 jobs were jeopardised as House of Fraser slashed jobs and Poundland fell into administration. Earlier in the year, Prezzo, Byron, Jamie’s Italian closed stores while Maplin and Toys R Us collapsed. High street stores have faced an average increase of 26.6% in business rates. This has been coupled with falling consumer confidence and higher overheads. (Sky News)
For more on the crisis in retail check out our video.
6. CREDIT SUISSE FINE
Credit Suisse has been fined $30 million for corruptly hiring relatives of Chinese government officials. These “relationship hires” avoided proper hiring processes. Chinese officials would then provide Credit Suisse with top contracts in return for the employment of their relatives.
Earlier this year, Credit Suisse was also fined $47 million by the US Department of Justice over the same issue. The DoJ claimed that it was “bribery by another name”. The fines faced by Credit Suisse over this scandal now total $77 million. (City A.M)
7. FACEBOOK ACQUIRES A&O TECH START-UP
Facebook has acquired Bloombsury AI, a start-up in Allen & Overy’s tech incubator. The social media giant bought the company to help in its fight against fake news. It is estimated Facebook paid $30 million for the company.
Bloombsbury developed technology capable of reading and understanding documents in natural language. It is then able to answer questions based on the information it has read.
According to Business Insider, this is an “acquihire”. An “acquihire” is where the company is only brings in the knowledge and talent from the acquisition target but does not buy its accompanying product. Since Facebook is adopting this approach, the future of Bloombsbury’s operations is currently unclear. (Business Insider)
8. BREXIT BANKING EXODUS
JP Morgan and Barclays have announced that they will move jobs to Frankfurt due to Brexit. Barclays will be moving up to 50 investment banking jobs to Frankfurt. These are relatively small numbers in context. Barclays employs over 48,000 people in the UK alone. CEO Jes Staley stated that there was no reason to move significant numbers of jobs to the EU. (The Guardian)
JP Morgan is also moving “several dozen” UK staff to continental Europe. EMEA employees received a memo last week informing them of the relocation plans to other EU locations by March 2019. JP Morgan employs 16,000 people in the UK. It also plans to double its workforce in Dublin due to Brexit. (The Independent)
Over 10,000 UK banking jobs were expected to be lost but now the losses are expected to be much lower.
9. VUE EXPANSION
Vue Cinema has added two new businesses to its portfolio, bringing its international acquisition total to 14. Poland Cinema3D and Showtime (Ireland) bring an additional 16 sites under Vue’s ownership. Vue now has 228 sites in Europe, 89 of them being in the UK & Ireland. Th details of the deal were not disclosed.
This news comes despite announcing in June, that it may delay its plans to launch an IPO. This was due to one of the largest shareholders considering selling its own stake.
Vue was founded in 2003 and now boasts over 80 million customers a year and turned over £772.5 million in 2016. (City A.M)
One of Uber’s biggest rivals Lyft, has just raising another $600 million in funding. This new funding round brought the company’s value up to $15.1 billion, a huge 100% increase from its value in April 2017. This is however, still significantly below competitor Uber’s $70 billion valuation but Lyft’s market share has been steadily increasingly. Lyft’s market share of the ride-sharing industry has risen 13% in 2 years, up to 35%. Uber has been plagued by scandals so if investors or consumers fall out of love with it, Lyft could certainly fill this space in future. (CNN)