This week’s news includes; Facebook pays $5bn in privacy probe, Sprint & T-Mobile $26 bn merger approved, Equifax settles data breach case for $700m, Uber trials subscription service
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:
- Sky News – Why we shouldn’t rush to become a cashless society
- E Financial Careers – How good is Boris for the bankers?
- Business Insider – The UK could already by in a technical recession because of Brexit
1. BORIS JOHNSON BECOMES PM
Boris Johnson convincingly won the Conservative Party leadership race to become Prime Minister of the UK. He beat rival Jeremy Hunt by 92,153 to 46,656 votes. Johnson immediately made his mark on his first full day in office, completely overhauling the cabinet. He essentially created a Brexit cabinet, appointing Brexiteers to the top posts. Notably, Jacob Rees Mogg, Dominic Raab, Priti Patel and Michael Gove were appointed as; Leader of the Commons, Foreign Secretary, Home Secretary and Chancellor of the Duchy of Lancaster (Deputy PM) respectively.
Johnson stands on a message of optimism and energy and certainly reenergised the House of Commons in his first clash with Jeremy Corbyn as PM. But the defining aspect of his premiership will undoubtedly be whether he can deliver Brexit. He has committed to leaving the European Union “do or die” on the 31st of October. He has pledged to attempt to remove the controversial Irish backstop from the withdrawal agreement but failing that, will leave without a deal. The EU were immediately clear however, that renegotiation is not possible. Michael Gove has now said that the government is now working on the assumption of “no deal Brexit”. With only three months until we are scheduled to leave, we are no doubt be in for a tumultuous period in politics.
In our insight article, we explore whether Parliament can actually stop a no-deal Brexit.
2. FACEBOOK PAYS $5BN IN US PRIVACY PROBE
Facebook has been fined $5 billion for breaching US privacy law. The case stemmed from Facebook’s involvement in the Cambridge Analytica scandal. Facebook promised to address its policies on use of personal data but has still failed to act. Federal Democrats approved the fine along with other measures as punishment for Facebook’s failure to act. US Democrat politicians argued that Facebook has made more than $5 billion from violating user data rights but Republicans said a higher fine would not have been actionable.
As part of the punishment, CEO Mark Zuckerberg will be required to loosen his grip on the company regarding privacy. Facebook must now have an independent privacy committee and greater monitoring of third-party apps. Controversially, under the deal, all senior company executives including Zuckerberg, will now be immune from prosecution for any past data offenses.
Though the fine is enormous, this is under one third of Facebook’s $16.9 billion second quarter revenue.
3. T-MOBILE SPRINT MERGER APPROVED
The US department of Justice have approved the $26 billion T-Mobile and Sprint merger. The deal has faced a number of regulatory hurdles since the two agreed to merge last April. The companies hope the deal will allow them to better deploy 5G networks and compete more effectively with giants Verizon and AT&T.
The Federal Communications Commission still need to approve the deal but it is likely that they will. In June however, state attorneys filed a lawsuit to block the deal on grounds of competition concerns. They alledge the deal would harm consumers by limiting choice. This lawsuit is now the last major hurdle facing the merger.
4. APPLE BUYS INTEL’S WIRELESS MODEM UNIT
Apple has bought Intel’s smartphone modem business for $1 billion. Modems allow smartphones to connect to mobile networks. Previously, Apple was Intel’s only modem customer but it was not particularly lucrative. Intel had already revealed plans to exit the market. This deal will now provide Intel with the opportunity to develop modems for a variety of products such as PCs and autonomous vehicles. For Apple, this allows them to produce modems in-house and increases its owned wireless tech patents to a staggering 17000. The deal should be finalised by the end of the year. Intel’s share price rose 6% in response to news while Apple’s remained unchanged.
5. EQUIFAX SETTLEMENT
Credit reference agency Equifax has agreed to pay $700 million to settle a huge data breach case. A hack in 2017 saw the personal data of 147 million consumers breached. Hackers accessed a company database which was inadequately secured and they kept access to this database undetected for months. The accessed information included names, addresses, social security numbers and credit card information. Equifax failed to take sufficient technical precautions leading to this vulnerability and was slow to react to patch it. The settlement was reached with the Federal Trade Commission, the Consumer Financial Protection Bureau (CFPB) and all 50 US states.
$425 million of the settlement figure will go into a fund to compensate affected consumers while $175 million will go to 48 states. $100 million will go to the CFPB in civil penalties. In the UK, Equifax was fined £500,000 last year after it transpired the breach 15 million people. This breach was before the General Data Protection Regulation under which Equifax could have been fined £120 million.
6. US PROBES BIG TECH
The US department of Justice has announced it will launch an antitrust investigation into the tech sector. The investigation will target “market-leading” companies and will investigate whether the platforms were illegally breaching competition law. Although no firms were named, Amazon, Apple, Facebook and Goggle are almost inevitably going to face investigation. The announcement of the investigation saw $33 billion wiped off Alphabet, Amazon, Apple and Facebook’s value. The investigation could have huge implications for the operation of big tech.
7. BOEING LOSSES
Boeing has revealed a huge $3.4 billion loss last quarter due to the 737 Max crisis. Boeing’s 737 Max planes were grounded globally in March after 346 people were killed due to the faulty model. The manufacturer has said that it may have to halt production of the model either temporarily or permanently. Production has already been reduced from 52 to 42 aircraft per month, but new deliveries have been suspended. There is no official date for as to when the planes will be allowed to fly but Boeing is in constant communication with regulators. The Boeing CEO feels confident that the 737 Max should be back in the air by October.
Check out our insight article exploring the crisis in more detail
8. NISSAN JOB CUTS
Nissan has revealed plans to cut 12500 jobs over the next 2 years. This follows it’s latest quarterly results showing operating profits decline to £11.9m, a 98% fall. The decline is primarily due to poor sales. Total sales for the quarter dropped by 6%, with European sales taking the heaviest hit, down 16.3%. Nissan is now scaling back production and so nearly 10% of its global workforce is set to be cut. The manufacturer said 14 sites would go but these have not yet been named.
These cuts come as no surprise however. Earlier this year the company revealed it would not be making its X-Trail vehicles in its Sunderland plant, forcing the government to revoke its £60m support package for Nissan.
9. UBER SUBSCRIPTION
Uber is testing a subscription service combining taxis, Eats, bikes and scooters. The subscription costs $24.99 a month on a rolling contract. The pass provides discounts on taxis, free delivery on Uber eats and free use of bikes and scooters. This pilot has launched in San Francisco and Chicago.
Uber is also looking at lower priced subscriptions with less discount. This scheme follows Uber’s Ride Pass subscription which provides consistently lower costs on taxis for a monthly fee. This is the first time Uber has combined all three services in a single offering.
Uber is keen to turn it’s fortunes around after its lacklustre IPO earlier this year. The company also posted a $1 billion loss for the first quarter alone.
10. BATHSTORE RESCUE
Collapsed retailer Bathstore has been rescued by Homebase but jobs are still at risk. Last month, Bath store called in the administrators, remaining open just to sell remaining stock. 159 workers were made redundant.
Homebase has now stepped in to buy part of the business. The deal saves 175 jobs in total, 150 of those being shopfloor roles. Homebase plans to incorporate Bathstore concessions into it’s stores. There are 91 other stores at risk of closure, leaving 200 jobs in jeopardy.