The week’s news included: UK to introduce big tech regulator, Nike settles Lil Nas X Satan Shoe lawsuit, KDB signs new £83m Man City contract using data analysts instead of agents.
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:
- FT – An independent Scotland would face a large hole in its public finances.
- BBC News – Are pay-by-the-minute booths the future of work?
- Sportico – What NFTs mean for sports business.
1. UK’S BIG TECH REGULATOR
The UK government has formed a new big tech regulator, the Digital Markets Unit (DMU). The body will review the practices and relationships of Big tech firms with advertisers and content producers. It will produce a new code of conduct that will be made into law, aiming to curb their dominance and level the playing field. The unit will be formed within the Competition and Markets Authority. Regulators across the globe are clamouring to bring in limits and curbs on big tech as concern grows over their extensive power.
This follows a clampdown in Australia, where Google and Facebook were obliged to strike agreements with content producers for the use of their content.
2. ALIBABA FINED £2BN
Chinese regulators have fined Alibaba 18.2 billion yuan (£2 billion) over alleged breaches of competition law. China’s competition regulator, the SAMR, found Alibaba had abused its market dominance as it prohibited merchants on its platform from selling on other online platforms. Along with the fine, Alibaba has been ordered to amend its business practices. Alibaba accepted the fine and will adjust its practices accordingly. The e-commerce giant holds 60% of the online market in China. The SAMR’s fine is the largest it has ever issued and dwarves the £1 billion figure that was initially predicted to be issued.
Many have attributed this heavy-handed approach as a backlash to government criticisms by Alibaba founder Jack Ma. Alibaba has lost 25% of its market value since Jack Ma’s speech in 2020 and the ramifications are extending to other areas. Jack Ma, evidently fearful for his safety, has been seen in public just twice in the past 7 months.
3. GRAB GOING FOR $35BN SPAC LISTING
Ride-hailing giant Grab is close to going public via a SPAC merger which could value the company at $35 billion. It will merge with SPAC firms run by US investment firm Altimeter Capital. Grab aims to raise $2.5 billion through the listing. This valuation would see it hold the title of largest SPAC listing ever.
Special Purpose Acquisition Companies (SPACs) are publicly listed shell companies that are designed solely to buy and invest in other companies. When SPACs list on an exchange, the entity itself typically has no track record or operations. Investors buy into SPACs primarily based on the calibre of the team running the SPAC. Once money has been raised, the SPAC will scout companies to merge with or invest in to generate returns for investors.
Grab provides food delivery and payment services alongside its ride hailing business. The Singapore based tech giant posted a 70% growth in revenue in 2020.
4. NIKE SETTLES “SATAN SHOE” CASE
Nike has settled its trademark lawsuit against MSCHF over the Lil Nas X “Satan Shoes”. Rapper Lil Nas X collaborated with fashion house MSCHF to produce the shoes. The trainers were modified Nike Air Max 97s. Nike claimed however, that MSCHF had not received endorsement or authorisation to sell the product using Nike’s logo. The sportswear giant then launched a trademark infringement lawsuit and swiftly won the case.
Nike has now reached a settlement agreement with MSCHF. As part of the deal, all 666 pairs of shoes will be recalled and removed from circulation. Customers will receive a full refund, $1018. The price and shoe design are with reference to the Bible verse Luke 10:18 – “So He told them, ‘I saw Satan fall like lightning from heaven’.”
5. AMAZON UNION BATTLE
Amazon has won a crucial battle against unions in the US. Workers at an Alabama Amazon warehouse overwhelmingly voted against plans to unionise. The vote was sparked by complaints over poor working conditions at Amazon warehouses during the pandemic. Had the vote been successful, Amazon would have had to agree terms with the RWDSU union covering conditions and pay for the 6,000 workers at the Alabama warehouse. Furthermore, it may have sparked action from warehouses across the US. This was a worry for Amazon, who claimed unionisation could harm its business model. In the end, warehouse workers voted 1,798 to 738 against unionisation. The union will challenge the results, alleging that Amazon intimidated workers during the voting process.
6. FACEBOOK INVESTIGATED OVER DATA LEAK
A huge leak of the data of 530 million people at Facebook is being investigated by the Ireland’s Data Protection Commission (DPC). The data was published in a hacking forum and the data included profile names, phone numbers and locations. Facebook claims that the data was from an old leak that has already been addressed. The tech giant says the leak was identified and fixed in 2019 and this latest leak simply contains that the same data. There is still huge concern over the sheer scale of data leak. The DPC will investigate to ensure the data is in fact old data and that no further action is necessary.
7. KDB SIGNS CONTRACT USING DATA ANALYSTS
Footballer Kevin De Bruyne has signed a new £83.2 million contract with Manchester City, using data analysts to finalise his decision. De Bruyne also did not use an agent, which is rare in the footballing world. He instead sought help from data analysts to assess how likely Manchester City are to achieve success in the coming years based on the current squad. He also brought the analysis to negotiations to help him secure a £50,000 per week pay-rise, to £400,000. This could see a shift away from the use of agents in favour of data analysts in contract negotiations throughout sports. Furthermore, sports clubs could also go on a hiring spree of data analysts for its own negotiations.
8. LG SHUTS DOWN SMARTPHONE BUSINESS
Electronics firm LG has announced it will shut down its smartphone business due to heavy losses. The electronics giant has incurred losses of roughly $4.5 billion since 2015 and there no immediate sign of a turnaround.
Despite being an innovator in the early 2010’s, competitors such as Samsung and Apple have stormed ahead, eating up their market share. LG shipped 10 times fewer phones than Samsung last year. This is also due to software problems with its own phones. While it still remains popular in the US and South Korea, the demand does not offset the losses. Furthermore, most of LG’s business is in other consumer electronics and it is soon branching out to produce electric car components. The closure of its loss-making smartphone division makes good financial sense. The division will ultimately be wound down by July 2021.
9. ASOS PROFITS
Asos has seen a huge leap in profits as lockdown 3 spurred online sales. The retailer posted a 275% rise in half-year profits and a 24% increase in revenue to £2 billion. It also added an additional 1.5 million customers.
Earlier this year, Asos paid £330 million for Topshop, Topman, Miss Selfridge and HIIT brands following the collapse of Arcadia group. They only bought the online business and unsold stock, meaning 2,200 jobs were lost. Asos is not done with its expansion plans. Last week, it launched a £500 million bond sale to raise more funds for expansion.
10. PEACOCKS RESCUED
After collapsing last year, high street retailer Peacocks has rescued with 200 stores and 2,000 jobs saved. A former executive backed by a consortium of investors is buying the chain, covering the huge £70 million debt. 200 stores, however, will not be saved under the deal. The other stores of Philip Day’s Edinburgh Woollen Mill group, including Bonmarche and Jaeger have all been saved following the group’s collapse late last year.