The week’s news included; FTC lawsuit to break up Meta given green light, GTA maker, Take-Two, buys Farmville maker in $12.7bn deal, ASOS plans LSE listing, Kim K & Floyd Mayweather sued over crypto scam
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:
- Retail-week – Will 2022 be the year retailers get real about the metaverse?
- Business Insider – The 32 smartest questions to ask at the end of every job interview.
- Lawgazette – Every lawyer will require familiarity with crypto, says master of the rolls
- Bloomberg – 50 companies to watch in 2022.
1. META LAWSUITS
It has been a tumultuous week for Meta. In the US, a groundbreaking lawsuit against the tech giant by the Federal Trade Commission (FTC) was given the green light to proceed by a federal judge. The lawsuit alleges that the tech giant’s current structure and practices breach antitrust law. Over 2.8 billion people a day use one of Meta’s platforms and the FTC alleges it has crushed rivals using unlawful practices. Consequently, the FTC aims to force Meta to sell Instagram and Whatsapp.
Last year, the FTC sued Facebook over the same issue but its complaint was rejected by the court. The FTC revised its complaint and submitted a more detailed complaint which has now been approved. The FTC successfully convinced the judge that Meta may have a market monopoly and maintains its position through uncompetitive practices. The case will now go to trial but Meta is confident that it will win this.
In the UK, Meta’s subsidiary, Facebook, is facing a £2.3 billion class action lawsuit. Over 44 million people could be compensated over “unfair” terms and conditions on Facebook’s website. Facebook collected data of users on the platform and on third-party websites where their advertising tools such as Facebook Pixel, were in use. According to the claimants, this helped Facebook make “excessive profits” and agreement to such wide data collection was imposed upon users through unfair terms. This allegedly constitutes an abuse of its market dominance. Facebook users who used the site between October 2015 and December 2019 could be considered eligible for compensation, if successful.
2. TAKE-TWO BUYS ZYNGA
The company behind GTA and NBA 2K, Take-Two Interactive, is buying the maker of Farmville, Zynga, for $12.7 billion. Take-Two will pay a 64% premium on Zynga’s share price as it sees the growth potential of the mobile gaming company. This comes despite a 38% decline in Zynga’s share price last year due to concerns that the pandemic boost given to online gaming was unsustainable. Take-Two will issue new debt, use cash reserves and $2.7 billion in financing from JPMorgan to fund the deal. The deal is still subject to shareholder and regulatory approval but is expected to be finalised by summer 2022.
3. UK ECONOMY REACHES PRE-PANDEMIC LEVELS
The UK economy grew by 0.9% between October and November, bringing GDP above pre-pandemic levels. This growth beat analysts’ estimates and was notably higher than the 0.2% growth seen in February 2020, just before COVID-19 took hold in the UK.
GDP was boosted by a 3.5% growth in construction as the shortage of building materials began to ease. Furthermore, early Christmas shopping also provided a welcome boost. There are still concerns that the Omicron variant could weaken economic growth, but with cases falling and hospitalisation numbers remaining stable, there is some optimism. Many analysts predict relatively strong growth in 2022, especially when Plan-B COVID-19 measures are removed.
4. GOOGLE INVESTS £730M IN NEW OFFICE SPACE
Google is expanding its office space in London with a huge £730 million investment. The tech giant will purchase the Central St Giles location that it currently rents and will refurbish it. The purchase is expected to increase Google’s office space by 50%. The new space will include outdoor covered areas for working and have meeting rooms designed for hybrid work. Google will now have space for 10,000 staff at its UK offices and the move forms part of a wider hiring spree. This move also indicates that firms are keen for staff to return to office work, albeit hybrid working.
5. ASOS LISTING PLANS
Asos has revealed plans to move from the AIM market onto the main London Stock Exchange. London’s Alternative Investment Market (AIM) is a junior to the London Stock Exchange. It has fewer entry requirements and is designed for smaller and newer companies. After 20 years on AIM, Asos plans to move to the main market for greater access to capital in order to achieve its “long-term growth ambitions”. Asos plans to complete the move by the end of February 2022. Asos’ share price rose 7.8% in response to the news.
KPMG has admitted that it misled regulators regarding its audit of Carillion. Carillion collapsed in 2018 under a £7 billion debt pile. KPMG’s audit in the run up to the collapse did not highlight any financial difficulties. Carillion employed over 20,000 people in the UK and had 450 UK government contracts. KPMG is now facing a hearing in which the Financial Reporting Council will determine whether KPMG forged documents and misled regulators. The CEO of KPMG admitted last week that “misconduct has occurred and that our regulator was misled”. The hearing continues and is expected to last five weeks.
In Malaysia, KPMG paid out $80 million to the government to settle a case over its failures with regards to the 1MDB scandal. Over $4.5 billion was embezzled from the state 1MDB fund between 2009 and 2014. KPMG was responsible for auditing the fund between 2010 and 2012. The architect of the theft, financier Jho Low, is still a fugitive.
7. UNVACCINATED STAFF
A number of large companies are taking measures against unvaccinated staff. Last week, Ocado, Next and Ikea all announced that they would be cutting sick pay for unvaccinated staff who were self-isolating due to COVID-19 exposure. At Ocado and Next, this will not affect unvaccinated workers who test positive for the virus. The moves could bring sick pay for unvaccinated staff down to the Statutory Sick Pay (SSP) minimum, £96.35 a week. Ikea went a step further and said some unvaccinated staff who test positive may also receive reduced sick pay. These moves reflect a relaxation in isolation rules for vaccinated persons. Now, vaccinated persons need not self-isolate if exposed to a positive case, they must only test negative. The isolation period remains at 10 days for unvaccinated persons. Businesses are struggling with staff shortages due to high rates of infection and exposure. Next defended its decision saying the matter was “emotive” but that it had to balance staff and shareholder needs.
In the US, many companies have fired unvaccinated staff. Sportswear giant, Nike, was the latest after reports emerged that unvaccinated staff in the US will be fired, if they don’t have exemptions. It introduced a vaccine mandate for corporate staff in October and issued a deadline for vaccination which has now lapsed.
8. DAILY MAIL OWNER GOES PRIVATE
The owner of the Daily Mail, Daily Mail and General Trust (DMGT) has been delisted from the London Stock Exchange after the Rothermere family took it into private ownership. Viscount Rothermere, great grandson of the founder of the Daily Mail, bid £871 million to buy out other shareholders. DMGT had been listed on the stock exchange since 1932 and owns brands including the Metro and the i alongside the Mail and the Mail on Sunday. Last year, the Daily Mail usurped Rupert Murdoch’s The Sun as the UK’s best selling newspaper.
9. ENERGY FIRMS
Energy firms are feeling the pinch of rising wholesale prices and warn of tough times in the year ahead. Last year, 25 energy firms closed down due to the crisis. Now, Ovo Energy, the UK’s third largest energy supplier, will cut 1700 jobs, around 25% of its workforce. The cuts will take place through voluntary redundancies due to merging of offices. Minimum pay for all remaining staff will be increased. Meetings with unions are ongoing. Ovo also found itself in hot water last week over a blog post where they suggested customers could save on energy bills by hugging pets or “doing a few star jumps”. The post was quickly removed while Ovo’s founder said he was “really embarrassed” by the advice.
E.On also found itself in the firing line after it sent pairs of socks to customers to encourage them to turn the heating down. Although this formed part of a wider environmental protection campaign, customers were angry at the timing and the message this sent, given the severity of the current energy crisis. People are already struggling this winter with increased prices and the energy price cap hike in April could see a further £600 added on to household bills annually. The company quickly apologised to customers who received the socks.
10. KIM K & FLOYD MAYWEATHER SUED OVER CRYPTO SCAM
Kim Kardashian, Floyd Mayweather and NBA player Paul Pierce are being sued by investors over their promotion of a cryptocurrency scam. Cryptocurrency organisation, EthereumMax, collaborated with celebrities to promote their EMAX token, increasing its value by 1370%. Its value then plummeted to an all-time low after major holders sold. This appeared to be a classic “pump and dump” scheme where insiders push an asset’s price up (“pump”) and then collectively sell the token at a pre-agreed price (“dump”). A class action lawsuit has been filed in California against the executives of EthereumMax and alleges the celebrities gave misleading statements to investors.