The week’s news included; Supreme Court Covid-insurance ruling provides lifeline for small businesses, Google completed FitBit acquisition, Bumble & Dr Martens IPO plans
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 A.M – Debate: Should Primark open an online store?
- Law Gazette – What lawyers need to look out for over the next 12 months.
- City A.M – How retail can survive in a post-Covid world
1. SUPREME COURT RULES ON COVID-INSURANCE PAYOUT
The Supreme Court has ruled that thousands of small businesses are entitled to pay-outs from their business interruption insurance policies. Insurers had blocked business interruption pay-outs to thousands of businesses, claiming the pandemic did not trigger their policies. They said most business interruption policies did not provide for such unprecedented situations.
The Financial Conduct Authority received complaints from policyholders and brought forward a test case. The case would assess whether the policy wordings and whether the pandemic-related losses were in scope. Eight insurers were involved in the test case, including Hiscox, QBE and RSA. Over 60 other insurers had similar business interruption insurance policies. The Supreme Court found in the policyholders’ favour and ruled that they were entitled to pay-outs. The decision of the court will cost the insurance sector hundreds of millions of pounds. This will, however, be a crucial lifeline for many small businesses on the brink due to the pandemic.
2. GOOGLE BUYS FITBIT
Google has completed its £1.5 billion acquisition of FitBit. There are serious concerns over the data privacy of FitBit users. Last month, the EU Commission approved the deal after many issues had been addressed. Google has promised to segregate FitBit user data, retain third-party access to FitBit’s platform and not decrease the third-party experience of other smartwatches linked to Android phones. These promises must be kept for 10 years. FitBit’s co-founder James Park, said that FitBit “will remain the same” despite now being a part of Google. FitBit has 30 million active users.
Despite the announcement, the US Department of Justice has said that its investigation into the acquisition is still ongoing. It is exploring whether the deal harms US consumers. The outcome of this investigation could see the deal face further restrictions and challenges.
3. PARLER SUES AMAZON
Right wing social media site Parler has sued Amazon over its decision to withdraw AWS hosting services. Parler claims the tech giant has breached anti-trust laws and suggests it was driven by political reasons. Amazon withdrew its hosting services following the attack on Capitol hill, taking the platform offline. The tech giant claimed Parler failed to moderate “dangerous content” that encouraged participation in the attack, in the days preceding the event. Google and Apple also removed Parler for the same reason. Parler can get back online if can find an alternative hosting platform.
Amazon responded to the lawsuit in a legal brief saying that Parler breached its terms of contract. It said Parler failed to remove “content that threatens the public safety, such as by inciting and planning the rape, torture, and assassination of named public officials and private citizens. There is no legal basis in AWS’s customer agreements or otherwise to compel AWS to host content of this nature.”
Check out our insight article exploring whether big tech are infringing on free speech by purging right-wing media.
4. LSE GETS GREEN LIGHT
The London Stock Exchange (LSE) has received EU approval for its £20 billion takeover of Refinitiv. Refinitiv is a financial software company created and owned by Blackstone Group and Thomson Reuters. The LSE’s acquisition is an all-share deal. Blackstone group will receive shares in LSE but no cash.
There were a number of a competition concerns, particularly that LSE would control an excessive amount of market data which could potentially lead to abuse. The EU Commission is now satisfied that these have been adequately addressed. LSE has agreed to sell the Italian stock exchange, Borsa Italiana, for €4.3 billion. LSE will also be required to allow access to its clearing services for 10 years.
5. BUMBLE IPO
Dating app Bumble has officially filed to launch its IPO. Bumble will trade under the Nasdaq ticker “BMBL”. The app could be valued at up to $8 billion. Bumble is an app that allows users to “swipe right” and connect with people they are interested in. The main difference from other dating apps is that only women can make the first move and reach out to the man. Bumble was founded in 2014. It has 42 million monthly active users and 100 million registered users. Bumble turned over $376.6 million in the 9 months to September 2020. It is the second most popular dating app in the US.
6. DR MARTENS PLOTS IPO
British bootmaker Dr Martens is preparing a £3 billion IPO. The company will seek to launch on the London Stock Exchange and will free float at least 25% of its capital. A further 15% of the company could also be put up for sale. Dr Martens will be seeking a £3 billion valuation. Analysts are confident this will be a blockbuster IPO as the FTSE 100 enjoys its best start to the calender year.
The first Dr Martens boot was made in 1960. Their boots still boast their trademark yellow stitching. The business has gone from strength to strength, despite the pandemic, posting £86.3 million in profit for the half year to September 2020.
7. CAR MAKERS BOOST ELECTRIC CAR PRODUCTION
German car groups, BMW, Daimler and Volkswagen have tripled their electric car sales in Europe in the last year alone. All three sold a combined 600,000 electric and hybrid vehicles in Europe last year.
This exceeded Tesla’s 96,000 vehicles sold. Volkswagen alone however, sold 117,00 wholly electric vehicles over the same period. This accounted for a fraction of the 5.3 million vehicles it sold across the content. Despite its significantly lower sales, Tesla’s market value is over four times larger than all of these car giants combined.
Tesla could soon find itself out of the forefront of the electric car. Traditional automakers are ramping up their shifts towards electric vehicles. Crucially, they are appealing to the mass market whereas Tesla still retains a luxury image. Volkswagen’s group comprises of twelve brands including Audi, Bentley, SEAT and SKODA. Daimler Group owns Mercedes and smart. BMW Group owns the brands BMW, MINI and Rolls-Royce.
8. M&S BUYS JAEGER OUT OF ADMINISTRATION
Marks and Spencer has bought retailer Jaeger out of administration for an estimated £5 million. The deal will, however, see the loss of all physical stores and jobs that had not already been saved. M&S will only be buying Jaeger’s intellectual property.
Jaeger and Peacocks fell into administration last year following the decision by its former owner Edinburgh Woolen Mill Group. There was hope that the physical stores could be bought, but given the dire state of the high street, hope is fading. All the stores which are closed due to lockdown measures are now expected to stay closed permanently.
9. NORWEIGAN AIR CUTS JOBS
Norwegian Air has announced that it will cut transatlantic flights, causing 1,100 job losses at Gatwick Airport. The cut price airline has decided to cut most of its long-haul flights as the pandemic takes it toll. Around 2,000 jobs will be lost globally as a result.
Most of the company’s 138 planes have been grounded for almost a year. Only a handful of short-haul flights have been providing critical income. With the UK travel corridor closing to all destinations, the airline industry will suffer even more. Understandably, the sector has urgently called on the government to provide additional support to prevent further heavy job losses.
10. MORRISONS PAY £10 PER HOUR
Supermarket Morrisons has become the first to pay a minimum £10 per hour. 96,000 of Morrisons’ staff will receive the increased the rate, after the retail trade union, Usdaw, negotiated it. Union members will need to approve the deal, but this is likely. The pay increase will see the company’s annual bonus scheme change to a guaranteed amount. An average worker will see their wages rise around £30 per week.
Morrisons is at the forefront of the drive to £10 per hour and analysts are not confident that most competitors will follow suit. Lidl is already increasing hourly wages for many staff, but other supermarkets have no major plans to change wages. The pandemic has seen employee numbers at supermarkets swell to cope with increased demand. Supermarkets are still assessing the sustainability of these numbers.