The week’s news included; JD ordered to sell Footasylum, Jeff Bezos loses lawsuit against NASA over SpaceX contract, Google’s parent launches drug discovery business, Yahoo pulls out of China.
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:
- BBC News – What are interest rates and why do they matter?
- City A.M. – Why it’s time to ban the word “sustainable” once for all
- CNBC – Stocks could soar to new heights in week ahead — even though inflation data may come in hot
1. JD ORDERED TO SELL FOOTASYLUM
JD has been ordered by the Competition and Markets Authority to unwind its £90 million acquisition of Footasylum. The CMA found that the deal would be harmful for consumers by reducing competition in the sector. It initially did not include online sales to consumers by brands in its assessment of JD’s market. JD appealed in September and in its latest decision, it considered elements of online shopping. Crucially, however, a survey by the CMA showed that half of people would go to JD if their goods were unavailable at Footasylum. This contributed to the CMAs decision to order JD to sell Footasylum.
JD has staunchly criticised the decision calling it “beyond logic”. They claim producers such as Nike and Adidas are significant direct competitors and should have been included in the assessment. Furthermore, Footasylum only holds 5% of the market. JD argues that these factors mean its acquisition of JD does not harm competitiveness or consumers. JD can appeal to the Competition Appeals Tribunal and has four weeks to do so.
Facebook has scrapped plans to use facial recognition software to scan photographs and videos. Previously, users could be notified by Facebook if someone else had posted a photo of them. Facebook would scan Individuals’ photos. The tech giant however, faced huge criticism over its use of the technology with regards to privacy and accuracy. Facebook had already paid $550 million to US users over claims their facial recognition tools breached state privacy laws. Facebook announced last week that it would only be using the technology in a narrow set of use cases.
Separately, a former startup company called Phhhoto sued Meta, Facebook’s parent, for breaching antitrust law. Phhhoto claimed Instagram cloned their business and killed its business. Phhhoto launched in 2014 and allowed users to create and share short videos. This was allegedly copied by Instagram’s Boomerang app, which was released on the same day as Phhhoto’s Android app. Facebook allegedly cut off Phhhoto from its social graph.
3. UK INTEREST RATES KEPT STEADY
The Bank of England’s Monetary Policy Committee (MPC) has voted to keep interest rates at a record low of 0.1%. Policymakers voted 7-2 to keep rates at 0.1% but warned of forthcoming increases as inflation rises. The MPC was keen to wait and see how the jobs market fared in response to the end of the furlough scheme. Furthermore, the reason for rising inflation (i.e cost of living) is due to global supply shortages rather than excessive demand. Central banks often raise interest rates to combat inflation to taper consumer spending. Given the current situation, the MPC was conscious that raising rates may not necessarily combat inflation. The MPC has not, however, ruled out voting for a rise at its next meeting, in six weeks’ time.
4. JEFF BEZOS LOSES NASA LAWSUIT
Jeff Bezos has faced a large setback in its lawsuit against NASA as a US Federal judge dismissed the claim. Bezos’ Origin Blue sued NASA over its $2.9 billion awarding of a moon-landing contract to Elon Musk’s SpaceX. The contract will see manned missions to the moon by 2024. Blue Origin claims there was an improper tender process and requests NASA to reconsider. Furthermore, they even offered to waive billions of dollars of payments from NASA if they were awarded the contract instead of SpaceX. It was hoped this move would encourage NASA to take up Blue Origin’s offer given current funding shortfalls faced by NASA. Blue Origin has not completed any orbital missions to date while SpaceX has completed many. This was a main factor in NASA’s decision. Jeff Bezos said he was disappointed with the result but respected the decision and wished the best for NASA and SpaceX.
5. GRANT THORTON FINED FOR POOR AUDIT
Auditor Grant Thornton has been slapped with a £700,000 fine by the Financial Reporting Council (FRC) for failings in its audit of Interserve. Interserve was a construction company that collapsed in 2019. The FRC found scepticism and evidence failings when making judgements about Interserve’s business. Due to Grant Thornton’s cooperation, the fine was reduced to £13 million to £720,000. The lead auditor also received a £40,000 fine. Grant Thornton also recently received a £2.3 million fine for its audit of Patisserie Valerie. In this case, the auditor missed a £30 million black hole in the bakery chain’s books.
6. ALPHABET LAUNCHES DRUG DISCOVERY BUSINESS
Alphabet, the parent company of Google, has launched a new drug discovery company. Isomorphic Labs will be based in the UK and will work to identify and create new drugs using artificial intelligence. This will build on work done by DeepMind, another Alphabet subsidiary. DeepMind currently had a health care division and has done important life science research. While Isomorphic Labs will be separate from DeepMind, there is expected to be collaboration between the two.
7. YAHOO PULLS OUT OF CHINA
Yahoo has pulled out of mainland China as the government regulations become increasingly tough to comply with. Chinese users are currently unable to access Yahoo services. The online giant said its decision to pull was because of an “increasingly challenging business and legal environment””. China has strict censorship laws, and the government are becoming more stringent.
Yahoo’s media brands including Engadget and Tech Crunch have also gone down.
This follows moves by Microsoft who shut down LinkedIn in China last month. It was the last Western social media site in the country.
8. CURRYS STRIKES RAPID DELIVERY DEAL
Currys has struck a deal with Uber to provide rapid 30-minute delivery. The electronics retailer will trial the service in 12 London boroughs. Customers will be able to quickly get laptops, printer cartridges and other hardware for just a £5 delivery charge. Over 1800 products will be available. Orders can be made through the Currys website or the Uber app. This mirrors moves by supermarkets to introduce rapid delivery services. Morrisons has teamed up with Amazon while Tesco recently signed up with Gorillas to provide the service. Currys anticipates a huge boost to sales and this is best shown by its announcement of a £75 million share buyback.
9. GREEN COMMITMENTS
Following the COP26 climate summit, businesses are doubling down on green investment. Rolls Royce and Qatar have signed a deal to pump billions of pounds into UK green engineering startups. The plan will see an investment fund. The plans could create up to 10,000 UK jobs in the coming years. Qatar will build a new engineering campus in the UK allowing startups to develop new green technologies. The project aims to create five “unicorns” by 2030.
The UK’s largest companies will soon have to make disclosures on their climate-related standards and practices. These plans will be voted on by Parliament with an aim to become mandatory by 6 April. This will affect the UK’s largest public organisations and private companies with over 500 employees and £500 million in turnover.
Some key agreements made at the COP26 include;
- 450 multinational organisations have agreed to support clean technology.
- Leaders agreed to tackle deforestation and provide funding to plant more trees
- A new scheme to cut methane emissions by 30% was agreed. China, India and Russia have not signed up.
- An agreement to move away from coal was agreed but again big users including the US China and India have not agreed.
10. ENERGY SECTOR WOES
The UK energy sector is in turmoil as nearly 50% of energy firms have collapsed since the start of 2021. 21 of the 47 energy firms that started the year have gone bust, according to energy consultant Cornwall Insights. Energy firms must comply with price caps meaning that soaring natural gas costs cannot be passed onto customers. Firms don’t have the ability to continue supplying customers at a loss and hence have had to shut down. Over 2 million customers have been affected by the problem and face higher bills as a result.