This week’s news includes; EU’s new copyright directive could ban memes, UK’s surveillance framework breaches human rights law, John Lewis’ profits crash 99% and Snapchat Chief Strategy officer departs
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 Independent “The UK economy is still in need of urgent reform 10 years after the financial crisis”
- BBC News ask who’s winning the global race to offer superfast 5G
- City A.M explains why advertisers are profiting from our outrage
1. NO DEAL BREXIT WARNINGS
A number of new warnings have come both from the government about the impact of a no-deal Brexit. Even companies have now been taking measures to mitigate potential adverse effects.
One of the headline warnings was that UK licenses will no longer be valid for driving within the European Union. It is unlikely that the EU would continue to recognise UK licenses in the event of a no-deal Brexit. This would require UK drivers to obtain an International Driving Permit or face being turned away at the borders. New driving licenses may even need to issue and this could be a long and intense administrative process.
Sky News looks at the No-Deal Brexit papers released by the government in greater detail.
Cadbury has announced that it will stockpile chocolate in the case of no-deal Brexit. The company has stated that the UK is not self-sufficient in terms of food ingredients. This measure is to ensure there is no significant disruption to its business. A no-deal Brexit is likely to cause disruption to the movement of goods, at least in the short term. The government has also advised that pharmaceutical companies stockpile medicines.
Last week however, Michel Barnier announced that a Brexit deal was possible before November.
For a full summary of the key opportunities and challenges of a no-deal Brexit in our insight article Breaking Down a No-Deal Brexit.
2.EU COPYRIGHT DIRECTIVE
The EU has approved its controversial copyright directive that could have huge ramifications for the internet as we know it. The key articles in the new legislation are Article 11 and Article 13. Article 11 (a.k.a the link tax) requires companies like Google to “share” revenue with content producers. In practice, this would require them to pay licences to content producers for the rights to post links to the articles.
Article 13 will require social media platforms to prevent the sharing of unlicensed and copyrighted material. Many viral images and memes shared on the internet are copyrighted images and creators receive no remuneration. The legislation in practice could require platforms to scan content before it was uploaded to ensure the use is not unlicensed. While large international sites like Facebook have the capacity to implement these measures, this could be a catastrophe for smaller platforms. The EU claim the legislation will help protect content creators and entitle them to their deserved income. Critics however, say this could destroy the internet as we know it.
There will be a final vote in January 2019 and if approved, all EU member states would need to implement to directive. (European Parliament News)
3. UK SURVEILLANCE BREACHES HUMAN RIGHTS
The European Court of Human Rights (ECHR) has ruled that parts of the UK’s mass surveillance regime breaches human rights law. The Investigatory Powers Act 2016 governs how UK intelligence agencies gather and share surveillance information. The ECHR ruled that there were “no real safe guards” with regards to gathering information to protect rights to private and family life. Agencies sharing of information with foreign governments did not however, constitute a violation according to the court.
The case was the first legal challenge against the UK’s new surveillance regulations. The challenge was brought forward by a number of charities and human rights groups. The group claimed that the legislation is authoritarian and infringes on civil liberties. (Tech Crunch)
4. APPLE EVENT
Apple revealed three new models of iPhones last week. The iPhone XS is the flagship model and will retail at $999, while the cheaper model, iPhone XR $749 will cost $749. The premium model the iPhone XS Max will cost $1099. While demand for new models is stagnating slightly, Apple has released increasingly expensive models to compensate. This has allowed it to keep revenue high and saw it become the world’s first trillion dollar company in August.
The real standout from the event was the regulatory approval to include heart monitors in their watches. Eletrocardiograms or ECG’s will be able to detect falls in the heart rhythm and help detect heart disease at an earlier stage. The technology will be available on the Apple Watch Series 4 later in the year. (Financial Times)
5. JOHN LEWIS PROFITS FALL 99%
John Lewis Partnership Group’s half year profits have collapsed 99% to just £1.2 million. This came despite sales of £5.5 billion in the first 6 months of 2018. Like for like sales however fell 1.2%
John Lewis Partnership group, which owns Waitrose blamed fall on a number of factors. The losses have been largely attributed to the retailers attempt to keep up with rivals using huge discounts. John Lewis had double the number of extravaganza days in 2018 as it fights off increasing competition. The company also attributed this to not passing on increased costs from the fall in the value of sterling onto consumers. (BBC News)
Check out our video explaining why high-street retailers are struggling so much.
6. UK ECONOMY
In the last 3 months, UK employment has fallen slightly, although wages have risen. The rate of employment has fallen 0.3% in the last quarter to 75.5%. Unemployment has however, fallen to 4%, while the number of economically inactive people has risen to 21.4%. Wages have grown faster than inflation, after years of wage cuts in real terms. Wages grew 3.1% in July, 0.7% higher than inflation. This news was welcomed by the government but with Brexit looming the relative stability of our economic figures could be jeopardised.
It was also announced last week that Mark Carney will stay at the helm of the Bank of England until 2020. It was deemed best for stability during the uncertain future with Brexit. The bank is highly unlikely to raise interest rates again from their current rate of 0.5%. Earlier this year, the bank increased interest rates from their record low of 0.25, set after the financial crisis.
7. DEBENHAMS LOOKS FOR TURNAROUND
Debenhams has brought in KPMG to help turn the business around. While Debenhams is not on the brink of collapse it is declining. Profits are expected to be roughly £33 million. The retailer has already issued three profit warnings this year as sales growth stutters. This year alone it has cut over 400 jobs in an effort to reduce its massive overheads. Debenhams story of struggle is very much similar to their rivals. It is simply another huge department store unable to adapt quickly enough to changing market conditions. Share prices collapsed 17% last week alone in response to the news.
There are currently talks of a merger with the recently rescued House of Fraser. This could be a recipe for disaster depending on the liabilities House of Fraser could bring with it. (The Independent)
8. MORRISONS £1BN EQUAL PAY CLAIM
Morrisons has completed the set of the big four supermarkets facing very expensive equal pay lawsuits. Female shop floor workers have launched a legal claim alleging that they are paid less than largely male distribution centre workers. They argue this pay structure is discriminatory because the work of shop-floor workers and distribution centre workers, are of equal value.
Tesco, Asda and Sainsbury’s are all currently engaged in legal action over the same issue, again brought forward by the law firm Leigh Day. At Morrisons, 80,000 staff could be eligible to make a claim, which could amount to over £1 billion in compensation. This is however, dwarfed by Tesco’s suit which could cost an estimated £4 billion. (Reuters)
9. UK GAMING INDUSTRY
The UK’s gaming industry is booming. Revenue in sector grew 34% to £697 million, up from £522 last year. The UK industry has been benefitting from an overall increasing in gaming across the market. UK gamers spent £5 billion on games in 2017, up 12%.
The boost in the UK sector has been uncharacteristically high. Between 2013 and 2016, the game sector only grew by £83 million. The boost was largely driven by the success of UK developed mobile games such as Angry Birds Action! and Golf Clash. (City A.M)
10. SNAP STRATEGY OFFICER DEPARTS
Snap’s chief strategy officer Imran Khan has announced that it he is leaving the tech firm. Khan, formerly an investment banker, was instrumental in Snap’s floatation last year. Since its IPO, Snap’s share price has fallen 40%. Khan claimed that this departure was to pursue other opportunities.
Snap’s business is in need of a turnaround. Khan is just another key executive who has left the company. In May, the head of finance and vice-president of monetization both left the company. Last quarter, Snap’s daily users fell for the first time ever but it managed to post better than expected revenue. Despite this however, Snap is yet to make a profit. With such a mass exodus of talent it will be interesting to see how Snap can change its fortune.
Check out our Company watch page for more information about Snap’s business.
