This week’s news includes; William Hill closes 700 shops, CMA puts Amazon investment in Deliveroo on ice, TikTok under ICO investigation, Missguided ordered to pay $3m to Kim K
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 Guardian – Behold, the new nanny-free state. Cheap pop for all and no one to say it’s bad for us
- BBC News – Is the ‘racist trainer’ controversy good for Nike?
- City AM – Fintech champions face an uphill climb if they want to expand into America
1. BOEING PAYOUT $100M TO CRASH VICTIM FAMILIES
Boeing has announced that it will pay out $100 million to the communities affected by the two 737 Max crashes which caused the deaths of 346 people. The pay-out is independent from the numerous lawsuits faced by the manufacturer. The money will go towards alleviating financial difficulties suffered by the families and will go to educational and community programmes. The company predicted that the total costs of the flaw would hit $1 billion. US airlines still have their bans in place on the 737 Max jets while reviews of the aircraft are still underway. (The Guardian)
Check out our insight article explaining the 737 Max issues.
2. WILLIAM HILL STORE CLOSURES
Bookmaker William Hill announced that it will be closing 700 shops, jeopardizing 4500 jobs. The company blames the closures primarily on the newly imposed limits on fixed-odds betting terminal stakes. In April, the government reduced the maximum stake on fixed-odd terminals from £100 to £2. This led to a “significant fall” in gaming machine revenue. The company had earlier warned that significant closures would ensue if the restrictions were introduced.
Problem gambling has become an increasingly widespread issue and these terminals, coined the “crack cocaine” of gambling, have been a huge contributory factor. Over 340,000 people in the UK are now classed as problem gamblers. Earlier last week, William Hill along with four other big gambling firms committed to pay £60 million a year to help with the treatment of problem gamblers. The government is keen to reform the gambling sector and tackle the issue of problem gambling. These reforms however, are likely to see incomes drop so many other large bookmakers are likely to follow William Hill’s suit and be forced to close stores.
3. JLR ELECTRIC CAR UK INVESTMENT
Jaguar land Rover has announced it will build new electric vehicles at its Birmingham plant. This will secure 2700 jobs at the plant. The new Jaguar XJ will be produced in the plant and will replace the petrol and diesel versions of the car.
This makes a welcome change from the gloomy outlook JLR has recently expressed. JLR has already announced cuts of 4500 jobs earlier this year. The manufacturer has been one of the most vocal critics of a no-deal Brexit and warned it could threaten future investment.
Despite the drive for electric vehicle production amongst manufacturers, the infrastructure still requires a significant amount of work. There simply aren’t enough charging points to cope with a huge consumer uptake in electric cars. Registrations of electric vehicles are up 60% this year but consumers are still tentative about uptake. There is no doubt that the electric revolution cannot happen without substantial investment.
Amazon Deliveroo investment on ice
The Competition and Markets Authority has put Amazon’s share of a half-billion-dollar investment in Deliveroo on ice. Last month, Deliveroo raised $575 million in a funding round led by Amazon. The competition regulator says it is now conducting a review and has issued an initial enforcement order. This is to determine whether there are any anti-trust concerns with the investment. If so, Amazon may be forced to sell off certain parts of its business for the deal to go ahead.
Amazon is seeking to cement a position in the food delivery business with this investment. The e-commerce giant has spread through to grocery, entertainment and even healthcare. Amazon does not yet have the infrastructure to carry out food deliveries as it outsources the last part of goods delivery, which is fundamental for food delivery. In practice, the CMA will allow talks to continue but Amazon will need to the all-clear from the regulator before any deal can be finalised.
Amazon UK jobs
Amazon has announced it will create 2000 new jobs this year in the UK. This comes as welcome news for post-Brexit Britain as industries jitter over the prospect of a disorderly EU exit. The majority of the roles will be skilled technical positions including software engineers, software developers and cloud technology experts. 170 of these new jobs will be in Amazon tech development centres. This follows something of a UK tech expansion for Amazon. The e-commerce giant recently unveiled plans to create 1000 new apprenticeships in its Amazon Web Services division. Amazon’s total UK headcount will reach 30,000 by the end of year. Amazon posted global revenue of £232 billion global revenue in 2018.
5. DELOITTE FINED
The FRC has fined Deloitte £4.2 million over it’s audit of government contractor Serco. Serco recently settled a case with the serious fraud office over deliberately defrauding the Ministry of Justice with a government tagging contract. A subsidiary of Serco charged the parent company £500,000 in costs which had been completely fabricared. These costs were then passed onto the Ministry of Justice at the expense of the tax payer. The company also was alleged to have charged for the transportation of people who were in jail, had left the country or were even dead. Deloitte was deemed to have fallen beneath the professional standards expected of them in its 2011 and 2012 audits of Serco Geografix. The partner in charge was fined £97,500 and was severely reprimanded.
This is just another case in a long list of fines issued against the big four for poor auditing. Politicians have already warned measures may be taken against the firms, including a wholesale breakup of the firms. Even the regulators themselves have come under fire for failing to uphold standards within the industry
6. TIKTOK UNDER ICO INVESTIGATION
Social media app TikTok is being investigated by the UK’s information commissioner. The investigations relate to concerns that young children are seeing harmful content on the app due to inadequate restrictions. This follows a US fine imposed on the company earlier this year. The Federal Trade Commission fined TikTok $5.7 million for collecting data from children under 13, all of whom are not supposed to use the app. Companies need parental consent to collect data from under 13’s. The UK information commissioner has already received complaints from primary school parents so the regulator is now reviewing the situation.
TikTok allows users to upload customised 15-second video clips of themselves. The app has over 1 billion downloads and has 500 million active users. It is owned by Chinese tech firm ByteDance
7. UK FINANCIAL CYBER-INCIDENTS UP 1000%
The number of cyber-incidents in the financial services sector rose by a 1000% in 2018. The number of cyber-incidents reported to the Financial Conduct Authority increased from 69 in 2017 to 819 in 2018. Nearly 500 of these reports were submitted by consumer banks. The increase in reported incidents is largely due to the introduction of GDPR in May 2018 which brought in obligations to report certain breaches. Although there was a rise in the number of attacks, they only accounted for 11% of reported incidents. The majority of incidents were due to software and equipment issues or third-party data protection failures. Companies have been warned however, a lack of pre-emptive measures such as regular cyber assessments and upgrading of IT systems, is leaving them a significant risk of an attack.
Cyber protection is more important than ever as cyber criminals become more sophisticated. Industry experts claim there is still a huge amount of work to be done, particularly by smaller companies.
8. DEUTSCHE BANK JOB CUTS
German banking giant Deutsche Bank announced it will cut 18,000 jobs following heavy losses. The cuts will form part of a €7.4 billion restructuring process and will see its global workforce fall by over 20%. The cuts will see the loss of its global equities and sales and trading divisions in the City of London and Wall Street. This will allow the bank to shift to its focus to core divisions such as corporate banking, private banking and asset management businesses. This process will involve the creation of capital release unit to dispose of €74 billion of risk-weighted assets.
The bank posted a €2.8 billion loss in its latest results and now aims to bring its headcount down to 74,000. The restructuring news was welcomed by investors as Deutsche Bank’s share price rose by 2.5%.
9. MISSGUIDED LOSES $3M KIM KARDASHIAN LAWSUIT
Kim Kardashian has won a $3 million lawsuit against fashion retailer Missguided. This is in relation to a trademark infringement claim. Kim K’s legal team launched a lawsuit against Missguided alleging they infringed her trademark by using her name and image to market copycat garments without her consent. Missguided marketed a copycat dress with a lookalike model only hours after Kim K posted a picture of the dress herself. Kim K alleged she suffered monetary damages to the sum of $10 million. Missguided failed to respond to the lawsuit giving Kim K’s team an easier route to obtain damages. The US District Judge however, ruled in a default order that Missguided is required to pay just $2,759,600. Missguided does have the right to appeal the ruling.
10. BOOTS STORE CLOSURES
Boots has announced that it will close 200 stores nationwide as it tries to reshape its business. Boots hopes to shift more of its business online but also it will consolidate stores to reduce costs. Although the closures will see 10% of Boots outlets disappear, the majority of staff will be redeployed. Currently 90% of the UK is within a 10 minute drive of a Boots store and this ratio is expected to be maintained following the closures. Boots is not struggling as much as many of its other high street competitors as despite an 18% year on year fall in profits. Boots currently has 56000 UK employees.