The week’s news included; Gig economy model ruled unlawful, Rohingyas sue Facebook for $150 billion for failing to tackle hate speech, LV= members reject £530 million US takeover bid.
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:
Opinion articles of the week:
- BBC News – How the West invited China to eat its lunch
- Music Business Worldwide – Universal vs Spotify: Which of music’s two giants will be worth more at the end of 2021?
- City A.M. – The Brexit jury is still out as we fail to grasp the vision of freedom we were promised
- BBC News – What is artificial intelligence and why is it important?
1. GIG ECONOMY MODEL RULED UNLAWFUL
The High Court has ruled that the gig economy model is unlawful in the ride-hailing industry. In a case involving Uber, the ride hailing giant claimed that it acts as an agent and any contracts related to passengers were between drivers and passengers only. The court found this to be unlawful and stated that operators must enter into contractual obligations with passengers.
Uber was already obliged in a court ruling to treat its drivers as workers instead of contractors. Uber swiftly introduced employee rights and benefits such as holiday pay and minimum wages. This latest decision fundamentally changes the relationship between Uber and passengers and could force the company to start charging customers VAT at 20%. This decision will also apply to other ride hailing firms such as Bolt and Ola. The company has not yet confirmed whether it will appeal the decision to the Court of Appeal. The gig economy will undoubtedly continue going through a transformative period as laws and regulations slowly catch up to this nascent business model. This latest decision is significant and could severely disrupt the business structures of ride hailing companies. How these firms respond remains to be seen.
2. ENTERTAINMENT GIANTS SUE STREAMING SITES
Online streaming sites AllAccessTV (AATV) and Quality Restreams are being sued by entertainment giants including Universal Studios, Disney and Netflix over copyright infringements. AATV and Quality Restreams are accused of unlawfully selling access to copyrighted films and TV programmes. AATV sells subscriptions giving access to a range of copyrighted content without signing up to the content producers’ services, an alleged infringement of copyright. Major names in the business are involved in the lawsuit. Apple, Amazon, Disney, Netflix, Paramount Pictures, Universal Studios and Warner Bros are all suing the companies. The court docket is available here.
3. FACEBOOK FACES ROHINGYA CLAIMS
Rohingya victims of Myanmar’s genocide are reportedly suing Facebook in a series of claims worth over $150 billion due to its negligence towards hate speech. Facebook user posts inflamed hatred and incited violence against the Rohingya Muslim minority in Myanmar. This allegedly contributed to the deaths of 10000 people and violence against many more. Rohingya Muslims have since been forced out of the country and live as refugees. Claimants allege Facebook had the power to remove hate speech and even shut down services given the gravity of the situation but failed to do so. Facebook admitted in 2018 that it had not done enough to prevent the incitement of violence against Rohingyas. The lawsuit against Facebook is expected to be lodged in early 2022.
4. EVERGRANDE DEFAULT
Chinese property giant Evergrande is officially in default as it missed an important repayment deadline. The company was due to pay interest on $1.2 billion of loans but it had not paid them. Credit rating agency Fitch officially declared Evergrande in default. This news sent jitters across financial markets.
The company has an enormous $300 billion debt pile and has been selling assets just to meet its financial obligations. Evergrande’s financial problems stemmed from its aggressive borrowing to fund its rapid expansion. Founded in 1996, it is now worth $31.27 billion and is one of China’s largest companies, employing 200,000 workers. Investors were not even informed of the financial difficulties until the news broke in September. 90% of Evergrande’s debt is owed to Chinese creditors so there are concerns that a series of defaults could harm China’s economy and ultimately the world economy. Evergrande’s share price is down over 80% this year alone.
5. DYSON APPEALS DAMAGES REJECTION
Dyson will appeal an EU court judgment rejecting its £150 million damages claim over vacuum label regulations. Regulations introduced in 2014 allowed older traditional vacuums to appear as energy efficient as bagless vacuum cleaners, like Dyson’s. Dyson contested the regulation, claiming the testing process unduly overstated the efficiency of traditional vacuums. Dyson successfully overturned the decision, and the regulations were annulled in 2018. The company sought to claim damages for loss of sales and increased costs due to the regulations. The General Court of the EU however, found that the EU Commission had carried out adequate care and diligence when deciding to implement the regulations. Dyson was also ordered to pay the legal costs of the EU Commission. The company is now appealing this decision.
6. HS2 SIGNS £2BN CONTRACT
HS2 has struck a £2 billion deal with Hitachi and Alstom to build the fastest UK manufactured trains. The trains will be 200m long, have 1,100 seats and run at speeds of up to 225mph. 54 “state-of-the-art” trains will be built, and they will be based on Japanese bullet train technology. 2500 jobs are expected to be created or supported by the deal. Last month, the government announced the Eastern leg of HS2 would be scrapped and billions would be invested into local rail services instead. The deal is, however, facing a legal challenge from Siemens. It lost out on the HS2 contract to Hitachi and Alstom and has criticised the procurement process. Siemens is now seeking damages as a result. Check out our article exploring the pros and cons of HS2.
7. LV= MEMBERS REJECT TAKEOVER
Members of insurance group LV= have rejected a £530 million takeover bid from private equity firm Bain Capital. Under the deal, LV= would be demutualised, meaning members would have lost their member status and would receive just £100 each in return. The deal needed 75% approval from the 1.2 million voting members to pass but only received 69%. Alan Cook, the chairman of LV= quit within minutes of the rejection of the deal. The board of LV= will now explore whether the firm’s mutual status could be retained to alleviate concerns of members. Discussions are now ongoing with Royal London, another mutual insurance firm, over a potential merger. Founded in 1843, LV =, Formerly called Liverpool Victoria, was set up to fund burial costs for Liverpool’s poor. It is now one of the UK’s largest insurers.
8. SPAR RANSOMWARE ATTACK
Supermarket chain SPAR suffered a ransomware attack last week and was forced to close 300 stores. James Hall and Company provides wholesale and IT services to SPAR was struck by the attack which ultimately left SPAR stores unable to take card payments. Many SPAR stores remained open by only accepting cash and selling only essential products. No customer details are thought to have been affected by the breach. Neither SPAR or James Hall provided further details on the breach. It is not clear who was behind the attack and the amount of ransom requested by hackers to restore SPAR’s services. Lancashire Police and the National Cyber Security Centre are also investigating.
9. SANTANDER PAYS €68M TO ORCEL
Santander has been ordered to pay Andrea Orcel a huge €68 million for reversing its decision to appoint him as CEO. The bank had made him an offer in 2019 but rescinded this shortly after due to disputes over his compensation package. The judge found that the two parties had signed a legally binding agreement and when they could not agree on his compensation package, Santander unilaterally and unlawfully rescinded the agreement. Santander has been ordered to pay Orcel €35 million in incentives, €17 million in signing bonuses as well as interest and Orcel’s legal fees. Orcel is currently CEO of Unicredit, Italy’s largest bank.
10. TIKTOK STEPS INTO E-COMMERCE
TikTok is stepping into e-commerce and is running a live shopping and entertainment event. Users will be able to buy a wide range of products from different vendors directly on the platform and TikTok will pocket a cut from sales. This follows moves from Facebook and Instagram who have hugely profited from offering e-commerce solutions on their platforms. Between 2019 and 2020, the number of e-commerce shoppers in the US, increased by 25% to 80 million.
The social media platform is keen to grow out of a purely online social media base. Earlier this year, it opened a physical space allowing visitors to partake in workshops and activities. TikTok has over 1 billion monthly users and generated an estimated $1.9 billion in revenue last year.