This week’s news includes; Google fined by EU, Comcast drops out of Fox race, Vote Leave fined for breaking electoral law and Amazon prime day sees Jeff Bezos pass $150 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 “A no-deal Brexit will harm both the EU and the UK, warns the IMF.”
- Financial Times (free) “ Donald Trump has criticised the Federal Reserve’s interest rate rises, breaking with White House tradition and worrying analysts”
- Bloomberg Tesla critic flips his view, finds the Model 3 has the potential to be profitable
1. GOOGLE’S ANDROID FINE
The EU has fined Google £3.9 billion ($5 billion) due to its unlawful use of its Android to “cement its dominant position”. The EU alleges Google required Android handset manufacturers to pre-install Google Chrome and the Google search app. This was a pre-requisite for manufacturers to have access to the Google Play store app. It also paid for exclusivity agreements meaning manufacturers were prohibited from pre-installing any search apps other than Google’s. Although users were always free to download other search apps only 1% of users do so
These tactics had been employed since 2011 and helped it unlawfully become dominant in smart-phone mobile internet services. Alphabet will face additional penalties of up to 5% of average global daily turnover if it fails to change its business practices within 90 days.
This is record fine by the EU and despite the ostensibly large sums, it is relatively small for Google. In the last 3 months of 2017 alone, it turned over nearly $32 billion and it has over $103 billion in cash reserves.
Google has still committed to appealing the decision. It is also currently appealing the £2.1 billion EU anti-trust fine it faces last year over its shopping comparison service.
BBC News looks closer at the fine and how the EU deals with anti-trust issue.
2. COMCAST DROPS OUT OF FOX RACE
Comcast has ended its $66 billion bid to acquire 21st Century Fox. Disney is and has been the forerunner with its recently improved $71 billion bid. Disney has already received anti-trust approval and the deal is looking as good as done. Fox has also stated it would have accepted Disney’s offer, even if it was lower than Comcast’s. This is because it believes Comcast’s acquisition would be unlikely to receive regulatory approval. Comcast produces and distributes media content. A Fox acquisition is likely to give it undue leverage over smaller content producers. Conversely, Disney only produces content meaning antitrust concerns are mitigated.
Comcast has been scrambling to acquire big media assets. It entered the race both for Sky and Fox. It has now committed to press on its $34 billion bid for Sky. (Reuters)
BBC News has learned that Comcast is likely to be the new owner of Sky, not 21st Century Fox.
3. VOTE LEAVE FINED
The Vote Leave campaign has been fined after breaking electoral law. The Electoral Commission found “significant evidence of joint working” between BeLeave. BeLeave spent over £675,000 in coordination with Vote Leave but none of this was declared by Vote Leave. BeLeave founder, Darren Grimes, spent this money on behalf of BeLeave, despite the organisation having a spending limit of £10,000. He declared that this money was his own, not the organisation.
The final outcome, Vote Leave spent £500,000 more than its £7 million spending limit. Its spending report was littered with inaccuracies and there were many missing invoices.
Vote Leave has been fine £61,000 and the founder of BeLeave has been fined £20,000. This breach of electoral law has also been reported to the police. (City A.M)
4. EU CRACKS DOWN ON AIRBNB
AirBnB has been given 7 weeks to improve its pricing transparency by the EU. The European Commission has imposed this deadline after an investigation found its customer terms to be unlawful.
AirBnB’s terms do not comply with EU regulations on transparent pricing and fair practices. Companies must show customers the full price before purchase including all mandatory charges. At the minimum customers must be informed that additional charges may apply at the point of transaction.
The company must improve clarity and amend its compensation and refund policies. In addition, the company must always highlight whether a host is a professional or private host. Customers are afforded different levels of consumer rights protection depending on this distinction.
Regulators are slowly catching up with industry. AirBnB was founded in 2011 and is a website allowing landlords and hotels to post short and long term accommodation. Hosts can vary from individuals offering to rent a spare room in their house, to mansions being rented for parties or holidays. The company has grown rapidly and turns over and is now worth $40 billion. (Reuters)
It was Amazon Prime day on Monday 16th but not even Amazon could keep up with its own success. The site crashed briefly on Monday after being inundated with users. Amazon Prime Day is where discounts and deals are offered to Amazon Prime members. Members pay an annual or monthly subscription for unlimited next day delivery and other services. There are currently over 100 million Amazon Prime members.
Despite the outage, over the 36 hours of Prime day, Amazon broke another sales record, selling over 100 million products. Sales were 60% higher than Amazon’s black Friday sales. Consumer groups however, argued that the “offers” are misleading as many products are cheaper at other times. Amazon however, claims that its pricing is transparent and customers can compare prices over time.
Amazon’s share price rose to another record, meaning its market cap topped $900 billion. With this growth, CEO Jeff Bezos has now become the richest man in modern history. His net worth now tops $150 billion. To put this in perspective, if Jeff Bezo’s were a country he would be the 56th richest country in the world. He surpassed Bill Gates peak wealth in 1999 of roughly $149 billion.
6. HIGH STREET STRUGGLES CONTINUE
Gaucho and Poundworld have both announced widespread store closures as the retail crisis deepens. All Poundworld stores will completely close by 10th August. The collapse will result in a total of 335 store closures and 5,100 job losses. Poundworld, founded in 1974, has been struggling like many other retail stores. The fall in the value of the pound, coupled with increased competition sent the chain into a downward spiral. All Poundworld shops will completely close by 10th August 2018. (BBC News)
Restaurant chain Gaucho fell into administration last week. It has announced the immediate closure of all 22 Cau restaurants, resulting in 540 job losses. It is currently seeking a buyer for Gaucho’s 16 sites so these will remain open. Cau was a loss making part of the business. Jamie’s Italian, Prezzo and Byron have all announced store closures in 2018. (Sky News)
7. BURBERRY BURNING
Burberry has burned/destroyed more than £90 million worth of unsold goods over the past 5 years. This was done to prevent the unsold items being resold at cheap prices or stolen. Predictably, this has sparked outrage amongst environmental campaigners.
Last year, Burberry burnt £28.6 million worth of goods including nearly £10 million of perfume. The perfume disposal was due to its new deal with beauty company Coty. Coty will produce new a range for Burberry. Burberry argued that the burning was environmentally friendly as energy generated from the process was captured.
Burberry went through an era where counterfeit products were rife. Its brand suffered massively as the exclusivity that creates the allure of designer brands. Burberry has sought to rectify its problems and has been somewhat successful. Its latest figures show profits of £413 million, up by 5% with revenue of £2.7 billion. This is in contrast to 2016 where it was forced to issue a profit warning after weak sales. (BBC News)
8. NETFLIX SHARES CRASH AS SUBSCRIBER GROWTH BUFFERS
Netflix shares fell by as much as 14% as they revealed a steep fall in user growth. Netflix added 5.2 million users in the last quarter, roughly 16% fewer than analysts’ estimates. It also posted $3.91 billion in revenue last quarter; $30 million shy of estimates. Netflix blames the World Cup drawing away consumer attention but investors are spooked that the media giant will be unable to sustain its remarkable growth in the long term. Netflix currently has 100 million subscribers worldwide and its share price has doubled in 2018 alone.
The rout last week caused as much as $13 billion in losses within a single day. It also knocked Netflix off the top spot as world’s biggest media company. Netflix’s market cap fell to $153.8 billion, significantly behind Disney’s $166.8 billion market cap. Netflix briefly overtook Disney in June, rising to $168 billion. (Bloomberg)
9. PREMIER LEAGUE HIGH COURT ORDER
The UK High Court has granted the Premier League permission to block illegal streams. The court granted an order to obligate Internet Service Providers to block and disrupt servers hosting illegal streams.
An order was already granted in the 2017/18 season but this new order extends these permissions. Last season, 450,000 illegal premier league clips were removed from online outlets. In addition, there have been a number of convictions for suppliers of “illicit streaming devices”, such as modified Kodi boxes. (Premier League)
10. DVD DOMINANCE
Despite the rising prevalence of digital film sales, DVD’s are still dominant in the UK. DVD sales still make up roughly 65% of UK film sales. In the first 6 months of 2018, film sales in non-physical formats rose by 27%. This however, only accounts for 22% of total film sales.
DVD’s are, as expected, on the decline. The DVD’s sales fell by 8% in the past year alone. New releases have accounted for 44% of all film sales. The best selling film in the UK over the past year was The Greatest Showman with 1.4 million sales. (City A.M)