The week’s news included; UK Canada agree trade arrangement, Apple pays $113m to settle “Batterygate” scandal, Amazon sets up online pharmacy, Elon Musk becomes third richest man as personal wealth hits $117bn
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:
- City AM – Chemistry won the vaccine battle, but logistics will win the Covid war
- Legal Cheek – What it takes to be an antitrust (competition) lawyer. –
- FT – Could my boyfriend be entitled to a share of my flat if we split?
- BBC News – Four reasons Topshop is not the brand it once was
1. UK CANADA TRADE DEAL
The UK has struck a deal with Canada, agreeing to continue trading on the same terms as the existing EU arrangement. The UK and Canada will trade upon the terms of Comprehensive Economic and Trade Agreement agreed by the EU and Canada. This measure will be temporary until a tailored free trade deal can be agreed between in nation. Advocates hailed this measure as it gives both sides time to negotiate without facing tariffs from January 1 2021.
Boris Johnson and his team are working hard to replace the agreements the UK currently enjoys due to its EU membership. A post-transition period free trade deal with Japan has already been struck and more deals like this will be necessary. Continuity agreements will be sought with 14 other nations including Mexico and Singapore. A key deal will be with the USA. Biden’s red lines for a trade deal are not yet clear but as the UK’s largest single trading partner, a good deal with the US will be crucial.
2. J&J PAYS $120m IN TALC CASE
Johnson & Johnson is to pay $120 million to a woman who claimed their baby powder gave her cancer. A New York Court found that there was sufficient links between the baby powder and cancer, upholding a findings from the initial jury. This however, marks a significant reduction from the $325 million that J&J was originally ordered to pay by a jury. J&J will pay $15 million in compensatory damages and $105 million in punitive damages. J&J accepts the settlement figure but asserts its baby powders were free from asbestos and safe. The company is facing lawsuits in numerous states with potential damage costs running into billions.
3. APPLE SETTLES BATTERYGATE FOR $113M
Apple has agreed to pay $113 million to settle a US lawsuit into its intentional slowing down of older iPhones. The tech giant will pay the huge sum to 34 US states who brought the claim forward. The scandal broke in 2016 when users found software updates slowed down their older iPhones. Apple claimed that this was necessary to prolong the longevity of the battery. Critics assert however, this was simply a ploy to force people to buy new iPhones. Apple did apologise and reduced the price of battery replacements from $79 to $29. It also added a feature allowing users to monitor the battery health.
Earlier this year, Apple agreed to pay up to $500 million to affected users as part of a class action lawsuit. While this is certainly a positive move, to put it in perspective, Apple reported revenue of $64.7 billion in Q4 of its 2020 fiscal year alone.
4. AIRBNB IPO
AirBnB has filed the documents to launch its IPO before the end of the year. The rental platform is seeking to raise roughly $3 billion. This could see it achieve a $30 billion valuation, well above the $18 billion low it saw at the outset of the pandemic.
A pandemic seems an inopportune time for a travel firm to launch an IPO. AirBnB has never posted a profit and suffered even heavier losses so far this year. It has already cut its workforce by 25% and kept itself alive through $2 billion in emergency loans from investors. AirBnB is however, confident in its model. It highlighted that many people rather than travelling abroad, use AirBnB to rent countryside accommodation to get out of the city. It also foresees that the industry will soon pick up to normal levels.
5. BUZZFEED TO BUY HUFFINGTON POST
Digital media company BuzzFeed is buying online news platform Huffington Post for an undisclosed sum. The takeover deal will also see the two companies collaborate in content sharing and advertising. Verizon Media will sell some of its stake to Buzzfeed and become a minority shareholder.
Huffington Post was founded in 2005 by Jonathan Peretti. Its best known for its liberal content which was initially submitted by bloggers for free. Peretti then created a side project in 2006, Buzzfeed which posts quirky quizzes and articles.
Both Huffington Post and Buzzfeed were struggling with falling revenues even before Covid-19. Last year, both firms made cuts to their staff. Buzzfeed also retracted plans to launch an IPO.
Many analysts saw consolidation as inevitable due to a growing bubble in the sector. Many major of online media platforms rose to prominence in the early 2010’s but have faced drying incomes as of late. Facebook, Twitter and Google have grown exponentially and have cleaned up a lot of ad revenue. Sites like Vice and Mashable have also suffered, seeing their value tank over the past few years. How long the major players in digital media can stay viable remains to be seen.
6. COMPARE THE MARKET FINED £17.9m
The Competition and Markets Authority has fined CompareTheMarket £17.9 million for breaching competition law. The price comparison website’s home insurance business was found to have unlawful clauses in its terms. Sellers of home insurers were contractually prevented from offering lower prices on other comparison sites. CompareTheMarket unlawfully created minimum prices for these products. This meant consumers were not getting the best prices on home insurance. The offending conduct took place between 2015 and 2017. The owner of CompareTheMarket, BGL turned over £714m last year.
7. AMAZON SETS UP ONLINE PHARMACY
Amazon has stepped into pharmaceuticals and has launched its own online pharmacy in the US. Prime members can receive free-two-day delivery and up to 80% off generic medicines. Furthermore, those purchasing prescription drugs can also receive up to 40%.
This, understandably, raises huge concerns about data. Users will need to provide health and insurance data to Amazon. Amazon could potentially use this data for targeted adverts in its retail business.
Amazon had previously acquired an online Pharmacy, Pillpack, for $735m in 2018, but here assured customers that health data would not be shared with its online retail business. Many however, are sceptical that the data gained from its own pharmacy will not be utilised in some way. Amazon is one of the few businesses that is establishing a significant presence in almost every sector. From web & data services, to drone technology to pharmaceuticals, Amazon is amongst the biggest in the business. Lawmakers have been keen to clamp down on big tech but whether they are even capable of doing so remains to be seen.
8. UK PETROL AND DIESEL CAR BAN BROUGHT FORWARD
The UK government has announced that all sales of new petrol and diesel cars will be banned from 2030. This is the second time the government has brought forward the date. Sales of hybrid cars will remain allowed only up to 2035. This forms part of the government’s new Ten Point Plan for a green industrial revolution. Less than 1% of the cars on the roads are entirely electric. Furthermore, the national infrastructure is not yet equipped to deal with mass adoption of electric vehicles. The government hopes to address this. As part of the plan, the government will also increase offshore wind production and heavily invest in hydrogen power. By 2030, the UK will have its first hydrogen powered town.
For more on the government’s “Ten Point Plan” click here.
9. JAEGER AND PEACOCKS ADMINISTRATION
High street retailers Jaeger and Peacocks have collapsed into administration, putting 4,700 jobs and almost 500 shops at risk. Both stores had been desperately seeking buyers but, understandably given the current state of the high street, were unsuccessful. The stores will continue to operate, and no cuts will take place immediately. Insolvency firms will now seek buyers for the two brands.
Peacocks was in a relatively decent position prior to Covid-19. Peacocks bought struggling retailer Bonmarche out of administration in November 2019. By October 2020 however, both Peacocks and Jaeger were on the brink of collapse while its owners sought new buyers for the brands. The second lockdown along with earlier restrictive measures have decimated already declining revenues.
10. ELON MUSK HITS NEW HEIGHTS
Elon Musk became the third richest person in the world last week as his wealth soared by $15 billion. Tesla’s share price jumped by 14% as it was accepted on the S&P 500 stock index. Tesla is already listed on the tech heavy NASDAQ stock index but its acceptance onto the S&P is a significant moment. It will enter the prestigious exchange on the 21 December and will be largest ever new entrant, worth over $400 billion.
Elon Musk owns 20% of Tesla and the positive news saw his wealth reach a whopping $117.5 billion. This is up from $27 billion at the start of 2020.
Musk has completely turned Tesla’s fortunes around. In 2018, it was burning through $1 billion a quarter and had never seen a profitable year. Now, Tesla has posted 5 consecutive quarters of profits. This was a crucial element that allowed it to meet the acceptance criteria of the S&P.
Tesla is the world’s most valuable car company. Tesla’s surge to the top spot is evidence that market value can be driven largely by hype. Toyota posted revenue of $281 billion last year, dwarfing Tesla’s $24.6 billion. Toyota sold over 20 times as many cars last year as the 500,000 Tesla expects to sell this year.