The week’s news included; Ant Group to launch largest IPO in history, LVMH & Tiffany (re)seal the deal, TikTok sues Triller in patent dispute, JP Morgan’s cryptocurrency takes off
Below are our top 10 stories that you need to know about. Be sure to check our twitter page, Facebook page and Instagram 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:
- Legal Cheek – Super-exam won’t save students money, claim junior lawyers
- CNBC – Morgan Stanley says it’s time to go ‘all-in’ on emerging market currencies
- City A.M – Is Sadiq Khan right to refuse to expand London’s congestion charge zone?
1. ANT GROUP LAUNCHES BLOCKBUSTER IPO
Chinese payment giant Ant Group is seeking to launch a huge $34.4 billion IPO, the largest in history. Ant Group will sell 1.67 billion shares with a target price of roughly £7.90 per share. The listing will take place across two exchanges, Shanghai and Hong Kong where it will seek to raise $17.2 billion from each. This IPO could value the company at $313 billion. Ant Group’s IPO has the potential top Saudi Aramco’s 2019 blockbuster IPO which raised $29.4 billion.
Ant Group is a Chinese payments firm which is affiliated with Jack Ma’s Alibaba. It is the world’s most valuable unicorn after just 6 years in business. The company serves over one billion users and processes £11.8 trillion worth of payments.
2. LVMH & TIFFANY (RE)SEAL THE DEAL
LVMH has resolved its ugly spat with Tiffany & Co and has agreed a $15.8 billion deal. The two companies entered a legal battle after LVMH was seeking to pull out of the deal after agreeing last year. LVMH expressed concern about the political climate between the US and France. LVMH was also acutely impacted by the coronavirus pandemic and felt it could no longer follow through. The two parties finally settled on a $425 million reduction in the takeover price. LVMH was initially looking to purchase Tiffany for $16.2 billion. Tiffany & Co sued LVMH for delaying the deal.
The deal will improve LVMH’s jewellery and watch division. The firm already boasts 75 brands including Louis Vuitton, Sephora, Givenchy and Tag Heuer. Tiffany was founded in 1837, employs 14,000 people worldwide and was at the centre of the 1961 Audrey Hepburn film “Breakfast at Tiffany’s.
3. TIKTOK SUES TRILLER
The owners of TikTok have sued rival app Triller over a patent dsipute. Both apps are video-based social media apps and the dispute is over patented technology to create music videos synchronised with other audio. Triller had initially sued TikTok over its use of the technology in July claiming TikTok has stolen its technology. TikTok’s owner Bytedance however, has now requested a court order to settle the dispute.
TikTok also resolved its US troubles last month by agreeing a partnership deal with US firm Oracle. President Trump had threatened to ban TikTok due to security concerns over its Chinese owner, Bytedance. TikTok’s US business needed a takeover deal with a US firm, or it would face a total ban. It struck a deal with Oracle. The partnership saw Oracle become TikTok’s cloud provider and obtain a 12.5% stake. Although the partnership wasn’t a full takeover, this agreement, along with other measures, satisfied the Trump administration.
TikTok has roughly 800 million monthly active users and has been downloaded 2 billion times. Their figures dwarf US firm Triller. Triller was founded in 2015 and has between 65 and 100 million monthly active users, although this is disputed.
4. BT SIGNS 5G DEAL WITH ERICSSON
BT has signed a deal with Ericsson for 5G equipment, allowing it to remove Huawei from its network. This is to comply with the government’s Huawei ban for all UK mobile network providers. There are growing concerns over the Chinese government’s influence over its multinational corporations. In July, the UK government announced a total ban on the purchase of Huawei equipment after 31 December 2020. Furthermore, as 5G networks are already operating, mobile network providers have until 2027 to entirely remove all Huawei equipment from existing structures. This was a reversal of the government’s decision earlier in January to allow Huawei to contribute non-sensitive elements of the 5G infrastructure.
BT expects 50% of its 5G traffic for its EE mobile network to run through Ericsson. The remaining 50% will run through Nokia. The split is to ensure that EE is not entirely dependent on one provider.
5. BIG TECH BOOMS
Big tech firms are posting huge profits and showing unstoppable growth trends despite the pandemic. Amazon was the big winner of the quarter posting a record $6.3 billion in profit. This is a nearly 300% mark up from last year. Consumers globally have turned to Amazon over their lockdowns, leading the tech giant from strength to strength. Its recent Amazon Prime day, which offered savings for Prime customers, was projected to bring in $10 billion in sales. In total Amazon turned over a huge $96.1 billion in the three months to 30 September.
Apple posted $64.7 billion in sales, increase from last year despite a 20% decline in iPhone sales. Microsoft, Facebook and Google all beat analysts’ expectations. Tech firms have proved themselves to be resilient in the face of global crises. This resilience is no doubt a result of their dominance in their respective markets. Our insight article explores how regulators have been cracking down on big tech.
6. FACEBOOK SUED
Facebook is being sued in a mass action UK lawsuit for its role in the Cambridge Analytica scandal. Nearly one million UK Facebook users have joined the action led by group “Facebook You Owe Us”. The plaintiffs allege that Facebook failed to protect its users’ data and breached its obligations under the Data Protection Act 1998. The group also claim the Information Commissioner’s Office fine of £500,000 issued in 2018 was wholly inadequate. This was the maximum fine the ICO was permitted to issue under the Data Protection Act 1998.
Had the scandal happened after the introduction of GDPR, the ICO could have issued a fine of up to 4% of global annual revenue. For Facebook this was $2.2 billion in 2018. The Cambridge Analytica scandal saw the data of 87 million Facebook users misused for election advertising purposes.
7. JP MORGAN CRYPTO PROJECT
JP Morgan’s cryptocurrency “JPM Coin” is being launched and the bank is now confident it will be a profitable venture. JPM Coin is the currency of a wholesale payments solution that will speed up payments for JP Morgan’s large clients. The investment bank moves over $6 trillion in payments a day. JPM Coin will remove the need for correspondent banks and their associated fees. Last week marked the first commercial use of the coin by a client.
Excitement around Blockchain solutions spiked in 2017 amid the Bitcoin frenzy. This excitement was short lived as many of these projects were simply unviable. By 2019, 98% of business to business Blockchain projects failed. Now however, the crypto and Blockchain market is maturing. PayPal announced it will be creating crypto wallets for its users. It is worth noting that JPM Coin is different to mainstream cryptocurrencies. Although it runs on a Blockchain, it is not decentralised, rather its entirely controlled and monitored by JP Morgan. Despite this, JP Morgan’s adoption could encourage adoption of the technology in other fields.
8. TFL BAILOUT
Transport for London has secured a £1.8 billion government bailout, supporting services until the end of March 2021. TfL has suffered severely during the pandemic as passenger numbers plummeted to record lows. TfL was on the brink of collapse as a result and desperately needed funding.
This bailout deal was always going to be subject to conditions that would require TfL raise more revenue. London Mayor Sadiq Khan fought hard against some of the most severe proposals. The government had sought to vastly expand the Congestion Charge zone to both North and South circular, covering 4 million more Londoners. This was vehemently rejected by Mayor Khan, but some other concessions were made. The £15 charge and lengthened operating hours will remain in place until the end of the March 2021. In addition, free travel for over 60’s and under 18’s will soon be paid for by London, not the government.
TfL’s bailout deal is only to cover the shortfall in revenue for the remainder of the financial year. The exact amount of money TfL receives will depend on the amount of money TfL makes in this period.
9. SQE EXAM CONFIRMED
The Legal Services Board (LSB) has approved the Solicitors Qualifying Exam which will overhaul the route to becoming a solicitor in England and Wales. The new exam will replace the Graduate Diploma in Law and the Legal Practice Course. Furthermore, the SQE will see the end of the 2 year period of recognised training aka the training contract. Instead, candidates will just need 2 years of qualifying work experience and this will include legal internships, paralegal work and experience working in a law firm.
The SQE will consist of 2 exams, SQE1 will assess understanding and application of the law. SQE2 will assess practical skills needed for working in practice.
The LSB saw no need to reject the proposals but will monitor the impact of the SQE on candidates and the sector. The SQE will be introduced in September 2021.
10. PIZZA EXPRESS CUTS
Pizza Express has announced a further 1300 job cuts as sales begin to further decline. These cuts will take place across all its UK restaurants, but no further sites will close. Pizza Express had already announced 1100 job cuts and 73 restaurant closures earlier this year as part of a restructuring. The company had a huge £1.1 billion debt pile in 2019 as was already struggling prior to the pandemic.
Many high street restaurants are struggling severely and are announcing job cuts. The new job support scheme will provide some help, but it does not look sufficient to stop the inevitable wave of redundancies. The “Eat Out to Help Out” scheme did see a spike in sales but with new restrictions implemented across the nation over the past two months revenues have waned. Pizza Express had 14,000 workers as of 2019.
Check out the new support measures in our insight article.