This week’s news includes; Facebook’s crypto plans divide opinion, Adidas loses 3 stripe trademark case, Game accepts Mike Ashley’s £52m takeover offer, EU cities take aim at Airbnb
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:
- Financial Times How companies are drawing top legal talent in-house.
- BBC News – Boohoo’s recycled clothes ‘will not solve fast fashion waste.
- Financial Times – Why smaller is beautiful for some corporate lawyers.
1. TORY LEADERSHIP ELECTION
The field has been whittled down to two, Boris Johnson v Jeremy Hunt. In the final round of voting, Jeremy Hurt defeated Michael Gove by just 2 votes to enter the final two. Boris Johnson increased his vote to 160, over half the 313 total MPs. The Conservative Party members will now select their leader between Johnson and Hunt as the candidates campaign around the country for the next four weeks.
Hunt’s victory helped avoid a rehash of the ugly 2016 battle between Boris Johnson and Michael Gove. Despite supporting Boris Johnson for PM, Gove left the team and launched his own leadership bid at the last minute. Had Gove entered the final two the battle against Boris Johnson would have certainly been more fiery. Against Jeremy Hunt however, the debate will be more civil but Boris Johnson is a clear favourite to become leader. Commentators do not see much chance of an upset. While Hunt is a respected MP, he lacks the grass root support of Boris Johnson. Jeremy Hunt also voted remain in the EU referendum so many leave supporting Tory members will not support him. The new leader will be announced in the week beginning 22nd July.
2. SAUDI ARMS SALES
A judge has ruled that the UK government’s arms licensing to Saudi Arabia may be unlawful and must be reviewed. Campaign Against Arms Trade brought a lawsuit against the government alleging that the licensing of arms sales to Saudi Arabia was breaching UK export law. The law prohibits the government to issue military equipment licenses if there is a “clear risk” that weapons could be used in serious violation of international humanitarian law. The judged deemed it may be in breach and should be reviewed. While the judge did not immediately suspend sales, the government said no new licenses would be granted while it considers the ruling.
Saudi Arabia is engaged in a war against Yemeni rebels which has brought about one of the worst humanitarian crises in modern history. The UN has said that over 10 million Yemenis are on the brink of starvation as a direct result of the war. Nearly 80% of the country’s 28 million population are in need of humanitarian assistance. The UK has licensed £4.7 billion of arms sales since the war began in March 2015. (BBC News)
3. FACEBOOK’S CRYPTO PLANS
Facebook is to launch its cryptocurrency called Libra in 2020. The currency will form part of a Facebook payments ecosystem. Users will be able send money to other users via a digital wallet app. Libra will be available on exchanges for conversion to conventional currency. The currency will however, be tied to bank deposits and government securities so users will not see price volatility as is common with many cryptocurrencies. The aim is to provide cheaper and more accessible payments. The long term goal is to turn Libra into a means of paying for goods and services.
Facebook received immediate backlash from US lawmakers. They called for Congressional scrutiny of Facebook’s plans before launch and some even suggested a total freeze on plans until Congress are satisfied. There is concern that Facebook already wields too much power of user data and additional of control of users financial transactions through unregulated cryptocurrency poses too much of risk to users.
4. ADIDAS LOSES 3 STRIPE TRADEMARK CASE
The EU has blocked Adidas’s move to expand the trademark of it’s three-stripe logo. Adidas already has trademarked it’s slanted three-stripe logo. The German sportswear maker applied to trademark “three parallel equidistant stripes of equal width applied to the product in whichever direction” . The EU deemed this too broad and stripes in any direction could not be considered unique to Adidas. Adidas was fundamentally seeking to squeeze out “copycat” manufacturers who use three stripes to market similar looking goods at a cheaper price. Despite Adidas’s iconic logo not being under direct threat from copycats there are concerns that an abundance of goods with three stripes could undermine Adidas’ brand. Markets shared this concern as it’s share price fell by 1.8%.
5. PFIZER ACQUIRES ARRAY BIOPHARMA
Pharmaceutical giant Pfizer has bought Array Biopharma for $11.4 billion. Array Biopharma is a cancer treatment specialist with a large portfolio of medicines. The firm announced progress in its work on colorectal cancer treatment. The firm boasts a strong portfolio of drugs and huge incoming royalties, so Pfizer is paying a premium of $48 per share. Array Biopharma shares soared 60% in response to the news.
6. SLACK LISTING
Messaging app Slack went public last week and proved a hit amongst investors. Shares in the tech company rose by as much as 60% before dipping to $39 a share, a 49% increase.
Slack is a work centred messaging app that uses group and project focused instant messages rather than emails. The company opted for a direct listing without the fanfare of traditional IPO. A direct listing involves the listing of existing shares, avoiding the use of underwriters and “roadshows”. Roadshows are part of typical IPO processes and involve senior company officials pitching their offering to institutional investors to generate interest. These roadshows help underwriters, who create the new shares, determine initial offer prices and manage prices. Spotify also opted for a direct listing last year.
Like many tech unicorns, Slack is yet to make a profit. The company posted a $144 million last year. Slack’s listing was a success as the company hit a $25 billion valuation.
7. GAME ACCEPTS ASHLEY BID
Mike Ashley has strengthened his grip on the high street as Game Digital accepted his £52 million bid. Mike Ashley increased his stake in Game from 26% to 40% and was obliged to make a formal takeover bid. Game felt the deal will provide a useful alliance with Sports Direct, particularly allowing it to expand its live video gaming arenas. In addition, in an increasingly challenging market the collaboration will help bring some financial stability to the company.
8. MONZO GOES TRANSATLANTIC
Banking app Monzo is breaking into the US. Monzo has gained a lot of popularity amongst UK millennials and has racked up over 2 million users in just 4 years. The company now has a valuation of $1.3 billion. The app has gained popularity particularly amongst young professionals. This is partly due to it’s fluid and use friendly app interface, but also the lack of fees for international transfers.
It is now seeking to make a move into the lucrative yet challenging US fintech market. Monzo will need to obtain operating licenses from each individual state. The regulatory framework in the US is a lot more stringent than the UK. It will partner with Sutton Bank initially in order to carry out customer transactions. Aside from this, the bank will have to adapt to US consumer infrastructure. Contactless and mobile payments are not as common as they are in the UK. As a mobile based bank they are somewhat ahead of the curve in the states. Whether Monzo can successfully navigate it’s way on the other side of the Atlantic remains to be seen.
9. CITIES TEAM UP AGAINST AIRBNB
Ten European cities have sought help from the EU in their fight to regulate Airbnb. Airbnb has enjoyed unfettered growth globally but evades landlord obligations even for long term stays. The European Court of Justice opined that Airbnb should not be considered a real estate agent but rather a digital information platform. This absolves the company from all landlord regulations and could exacerbate the exploitation of this loophole. Many local residents are unable find properties as Airbnb property owners price locals out by offering homes to tourists at a premium. In addition, those who do stay in Airbnbs do not enjoy the same security which rental regulations provide to traditional tenants.
This issue has led to Amsterdam Barcelona, Berlin, Bordeaux, Brussels, Krakow, Munich, Paris, Valencia and Vienna signing a a joint letter, urging the European Commission to take action. In Paris, there are around 60,000 Airbnb listings. In Palma de Mallorca, a 50% rise in tourist lettings saw a 40% increase in rents for locals. The government then voted to ban almost all lettings to prevent locals being priced out of their cities.
The social consequences of lifestyle technologies are still only just becoming apparent but there is evidently great community concern about the issue. Regulation is simply unable to keep pace with the new technologies which have entered grey legal areas. While, the ECJ opinion does not hold out much hope in the case of Airbnb but this is just one battle in a war against untamed big tech.
10. 3D PRINTER CONVICTION
A UK man has been convicted for making a gun using a 3D printer. This is the first UK conviction of its kind. The man claimed he was printing the gun for a university project. Since the gun was capable of firing a shot, a firearms license is required. The man denied that he was aware that the parts created were capable of firing shots but pleaded guilty to manufacturing a firearm. The man will be sentenced on 9 August.