The week’s news included; Facebook ordered to sell Giphy, Shell pays $111m to Nigerian community over historic oil spill, Messi’s $41m PSG contract includes crypto payments, Google cuts pay off staff who work remotely.
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:
- The Fashion Law – Record Numbers of Firms Are Being Swallowed by Private Equity – Should We Be Worried?
- The Economist– Why regulators should treat stablecoins like banks.
- Business Insider – Square’s $29 billion deal for buy-now, pay-later player Afterpay is the starting gun for the race to build a money super app.
- City A.M – Britain 2030: Can the tech success story continue?
- Daniel Geey – Will Paris Saint-Germain recover the sums spent on Messi’s wages from shirt sales? ‘The Shirt Sales Myth’
1. FACEBOOK ORDERED TO SELL GIPHY
Facebook may be forced to sell online image platform Giphy after the UK Competition and Markets Authority (CMA) highlighted competition concerns. The social media giant bought Giphy for $400 million last year, but the CMA says the deal will harm competition in the social media market. Furthermore, it would remove a potential challenger in the display advertising market.
Giphy hosts millions of GIFs which are integrated into and are shared on Twitter, Snapchat, TikTok and of course, Facebook. Facebook’s acquisition of Giphy could lead to denial or limitation of service to competitors, according to the CMA. Despite Facebook and Giphy being based in the US, the CMA has power to investigate mergers of businesses that turnover £70 million in the UK or hold 25% of a given market. Facebook rejects the CMA’s findings and will work with regulators to push the deal through. The CMA will publish its final report on October 6.
2. NORTON BUYS AVAST FOR $8BN
US cyber security firm NortonLifeLock will buy British competitor Avast in a $8.6 billion deal. The two companies are heavyweights in the cyber security field and will boast 500 million customers as a combined entity. The deal will also help innovation and development of better security technology. Avast shareholders will receive cash and newly issued Norton shares, in a deal valuing Avast at nearly $8.6 billion. The deal is expected to be closed mid-2022.
3. SHELL PAYS $111M OVER NIGERIAN OIL SPILL
Shell has agreed to pay a Nigerian community $111 million over an oil spill in 1970. The Ejama-Ebubu community was affected by an oil spill in the region during the Biafran War. The spill damaged farmlands, marine ecosystems and even turned rain black. Shell had argued the damage was caused by third parties during the Biafran war, but this has been ultimately rejected by the courts. Legal action against the oil giant was launched in 1991 but has remained in the courts ever since. Shell was fined $41 million by Nigerian courts in 2010 and the Supreme Court recently confirmed the increased fine. Nigeria’s Ogoniland has faced over 3000 oil spills in the 15 years up till 1991.
4. GOOGLE WFH STAFF FACE PAY CUT
US-based Google employees who permanently work from home could see their pay slashed. The tech company will provide employees with a calculator that shows their difference in pay if they choose to work remotely from a different city. The cost of travel amongst other factors would be deducted from workers pay if they choose to work remotely, meaning those with longer commutes would see notable reductions in their pay. Those who work remotely from the same city however, will not face any reductions.
Big tech companies have recognised the viability of working from home long-term, as many firms offer employees the opportunity to work remotely indefinitely. This could see the wider introduction of tiered remuneration structures, where employees commuting to the office are paid more than those working remotely.
The plans will not apply to Google staff in the UK, for the time being. UK labour laws are more stringent than in the US, so such changes could see legal action brought against employers. A government minister, however, has suggested docking pay for civil service workers who opt to work from home long-term.
5. CRYPTO PAYMENTS
Last week, football star Lionel Messi signed a $71 million two-year deal with French club Paris Saint-Germain and his package will include crypto tokens. Messi’s total package comprises of $41 million in salary and bonuses with a $30 million signing fee. He moved to PSG as a free agent as Barcelona could not afford to renew his contract. Messi will receive PSG’s “$PSG Fan Tokens”. These tokens can be used to be involved in decisions taken at the club. They are also tradeable on cryptocurrency exchanges. PSG’s token soared by 130% in five days as news broke Messi was coming to the club.
Additionally, US cinema chain, AMC, will allow customers to pay for movie tickets and concessions in Bitcoin by the end of 2021. Customers at its 620 cinemas in the US will be able to pay using the cryptocurrency. No information has been provided on whether this will apply to its 358 cinemas in Europe. AMC owns Odeon in the UK. AMC was caught up in the meme stock saga which saw amateur investors pile billions into Gamestop and AMC stock to spite short sellers. Despite AMC’s share price soaring 1500%, this did not improve its financial position as revenue plunged 40% in its latest half-year report due to the pandemic. It is hoped that allowing Bitcoin payments will help attract younger viewers.
6. CMA ORDERS GROUPON TO IMPROVE PRACTICES
The Competition and Markets Authority (CMA) has ordered Groupon to improve the way it treats customers. The online discounter has failed to give customers refunds or replacements for products despite being legally obliged to do so. Many customers are offered Groupon “credits” instead of refunds or replacements. Alongside this issue, Groupon has failed to ensure the accuracy of descriptions of products and services and ensure they are of sound quality. The CMA has now ordered Groupon to improve its practice or face court action. Groupon has said it will cooperate fully with the regulator.
In 2012, Groupon had already pledged to ensure customers were not misled about their rights to refunds and replacements. Groupon turned over $1.47 billion last year.
7. VODAFONE BRINGS BACK ROAMING CHARGES
Vodafone has announced that it will reintroduce roaming charges for UK users travelling in Europe. New and upgrading Vodafone customers will be charged £1 per day or more to use their phone in the EU. Only a few, typically more expensive plans, will be exempt from roaming charges. Users can buy 8 or 15-day bundles for £1 a day or a flat charge of £2 per day for using their phones in Europe. UK users won’t face charges for using their phones in the Republic of Ireland. The charges will apply from January.
Vodafone becomes the second UK mobile company to reintroduce roaming charges following EE who announced the same in June. This comes in spite of a pledge by mobile network providers to not reintroduce roaming charges post-Brexit.
8. AUTOMOTIVE SECTOR
The consumer automotive sector is shifting and the past few months have provided strong indicators of these shifts. Due to a shortage of new models, second-hand car sales have doubled in the second quarter of 2021. The market soared 108.6% from last year and up 6.6% from pre-pandemic levels. Demand has soared as lockdown restrictions eased and people began traveling.
For the second month running, more electric vehicles were registered in the UK than diesel cars. With the ban on sale of new petrol and diesel cars upcoming in 2030, manufacturers are ramping up production of electric models. New car registrations however, fell by a third, driven by a shortage of models available. This shortage of models is primarily due to the global shortage of semiconductor chips. These chips are core components in modern vehicles and power many of the crucial functions. Check out our article explaining the shortage in more detail.
Another issue for motorists is the global price of oil on the rise. Prices are now around $70 per barrel, well above pre-pandemic levels. Opec cartel members agreed to add 400,000 barrels a day to their output but this isn’t expected to resolve the issue. The US has been acutely affected as gasoline prices are up 41.8% since July 2020.
9. BOOHOO CREATES 5000 JOBS
Boohoo has announced plans to create 5000 jobs over the next five years. This will nearly triple its workforce and forms part of a £500 million investment plan. The online retailer has been on an acquisition spree, purchasing Debenhams, Dorothy Perkins, Topshop, and Oasis & Warehouse over the past 2 years. This looks set to continue with this latest investment programme. Boohoo will also be keen to improve standards after a scandal broke last year over working conditions at one of its supply chain factories in Leicester. Boohoo turned over £1.2 billion last year.
10. PRET CONTINUES COVID PAY CUT
Pret a Manger has informed staff that the temporary Covid related pay cuts will be permanent due to a sustained decline in income. Since September last year, staff have not been paid during work breaks to cut costs and this will now continue indefinitely. Only a fraction of office workers are back in offices full-time, and this has impacted Pret a Manger’s business heavily. Pret’s CEO says, “the business is still in recovery” and needs to cut costs to stem losses. A review will take place next April, but staff are considering strike action against this move.
Pret recently introduced its new coffee subscription service, providing customers with five cups of coffee per day for just £20 per month. This hasn’t turned Pret’s fortunes around as it still faces financial difficulties. Last year, Pret slashed over 3000 jobs and scrapped its dividend due to the pandemic.