The week’s news included; EU agrees new big tech laws, Fake reviews to made illegal, Netflix loses subscribers in Q1 – market value crashes by $50bn.
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:
- The Fashion Law – How Abercrombie Ended up Being Sued by 250,000 Employees
- Retail Gazette – Why won’t Boots bidders meet Walgreens’ £7 billion price tag?
- Reuters – IMF sees UK growth slowing to weakest in G7 next year
- BBC News – Why Argentina is embracing cryptocurrency
- Music Business Worldwide – With Netflix losing subscribers, is music’s own streaming party over?
1. EU AGREES NEW BIG TECH LAWS
The European Union has agreed to new regulations that force tech giants to tackle illegal content on their platforms. The Digital Services Act (DSA) will oblige firms like TikTok and Meta to take down illegal content rapidly or face fines of up to 6% of global annual revenues. Marketplaces like Amazon will also be required to prevent illegal products being sold. For all major tech firms these fines will run into billions and could have a significant impact on their practices. The legislation will now need formal approval and could come into force in 2024.
Tech giants are under increasing pressure to reform and the EU is undoubtedly leading the way from a regulatory perspective. The DSA is in addition to the recently agreed Digital Markets Act (DMA). The DMA will prevent the largest of firms from abusing their dominance by making companies like Google and Apple open up their platforms to other firms. For example, Google and Apple must offer smartphone users alternative search engines and browsers to their own native options. New laws will also apply to platforms like WhatsApp and Facebook Messenger to give people more control over how they send messages. Tech firms including Twitter and Google have welcomed the DSA and will work with regulators to ensure effective implementation.
2. FAKE REVIEWS TO BE MADE ILLEGAL
New rules could see companies fined 10% of their global turnover for buying fake reviews. The proposals will make buying or posting fake reviews illegal and the competition regulator will get additional powers to police this. The government said about £900 of the average UK households’ spending is influenced by fake reviews. Furthermore, shoppers also enter into around £60 of unwanted subscriptions. Websites that host reviews, like TrustPilot and TripAdvisor, will be obligated to take steps to ensure reviews are genuine. Businesses that offer subscription services will need to give clearer information before signing up customers, send reminders of the end of trial periods and make leaving contracts easy.
The Competition and Markets Authority (CMA) will be able to fine businesses and review hosting platforms up to 10% of their global annual turnover for breaches of the rules. Individuals who write fake reviews can also be fined up to £300,000. Under the plans, the CMA will be able to issue fines directly and will not need to go through the courts. Many have warned however, that the rules should not put undue burdens on businesses. The legislation will now go through Parliament before becoming law, if passed.
3. NETFLIX LOSES USERS
For the first time since 2011, Netflix lost subscribers in a quarter. The streaming giant lost 200,000 subscribers in the first quarter of 2022, way off its initial predicted growth of 2.5 million new users. Netflix foresees that things will get worse as it expects to lose 2 million subscribers in quarter 2. While its decision to withdraw from Russia saw the loss of 700,000 users, this was not predicted to have led to an overall decline in user numbers. This drop is largely attributed to Netflix’s recent decision to raise prices. Over 600,000 US and Canadian users cancelled their subscriptions following this.
Netflix’s revenues fell short of analysts estimates, reaching $7.87 billion. Net profit fell by 1.6% to $1.6 billion. Netflix also blames users sharing account passwords for their declining user base and income. Markets were spooked by the news and Netflix’s share price crashed 25% wiping $50 billion off its value.
4. CNN SHUTS DOWN STREAMING SERVICE
CNN is shutting down its CNN+ streaming service barely a month after launching. Fewer than 10,000 people use the service at any one time, significantly fewer than anticipated. CNN’s owner, Warner Bros Discovery (WBD), said it will instead focus on its core divisions such as news and other digital offerings. Further details on the reasons for the shut down were not given but evidently, WBD does not see growth potential in the current economic climate.
Current subscribers will be refunded when the service shuts down on 30 April. The broadcaster had already spent $300 million on the project and had previously planned to invest over $1 billion in CNN+ over four years, but these plans have now been scrapped. Furthermore, CNN’s head of digital streaming strategy will step down. The hundreds of staff working for CNN+ will now have 90 days to seek another role within the organisation or they will receive a severance package.
5. AMAZON EU POSTS €1.16BN LOSS
Amazon’s European business posted a €1.16 billion loss in 2021 and therefore paid no corporation tax. Revenue at the tech giant soared to €51.3 billion for the year. Amazon EU Sarl is based in Luxembourg and benefited from €1 billion in tax credits. This European arm covers sales in the UK, France, Germany, Italy, Poland, Spain, Sweden and the Netherlands. The huge loss for the year was largely due to Amazon’s rapid expansion. Over 50 sites were opened across Europe and 65,000 new jobs were created. As corporation tax is based on profits, Amazon EU sarl was not liable to pay any. Amazon’s relationship with Luxembourg had come under fire after the EU argued the tech giant received unlawful state aid. This was rejected by the court and Amazon was not required to pay €250 million in back taxes.
6. DISNEY LOSES FLORIDA SPECIAL STATUS
Walt Disney has been stripped of its special self-governing status in Florida. Disney has special permission to levy tax, build roads and even run utilities with regards to its Disneyland theme parks. It also has its own municipal government, fire department and board of supervisors. These benefits are why Disney chose Florida for its theme parks and it has saved millions in taxes.
The decision to revoke its status is largely political retaliation for Disney’s opposition to the “Don’t Say Gay” bill in Florida. The bill seeks to prevent the youngest classrooms of elementary schools from discussing sexual orientation. Disney suspended political donations in Florida and supported organisations fighting the bill. Florida’s Republican Governor, Ron DeSantis, said Disney “crossed the line” with its opposition and moved to strip Disney of its self-governing status. The move was quickly approved by the House and Senate. Disney has enjoyed this special status since 1967 but this will now be revoked from 1 June 2023. Disney is Florida’s largest private employer with over 80,000 staff. BBC News looks at the matter in more detail.
7. APPLE WORKERS PLAN UNIONISATION
Workers at an Apple store in New York have taken steps to create a union. Apple’s Grand Central Central Station workers must get support from 30% of colleagues to have a union election. The workers pushing for unionisation are requesting a $30 minimum hourly wage for all staff, along with additional holiday and safety measures.
This follows a recent successful move by Amazon warehouse workers which forced the tech giant to recognise their trade union. There is a growing desire to unionise as working conditions and real wages have stagnated or declined for many. Whether Apple’s workers’ plans will be successful remains to be seen.
8. TINDER OWNER WINS LAWSUIT AGAINST MUSLIM MARRIAGE APP
Match Group has won its legal battle against Muslim matchmaking app Muzmatch for an alleged trademark infringement. UK based MuzMatch is a platform designed to help single Muslims find spouses and features similar functions to Tinder. Like Tinder, if both sides swipe right, they are matched and can begin communicating. The platform also includes a chaperone function.
Match Group claimed the platform infringed upon their trademark as they use the word “match” in their metadata to help it appear higher in internet search results. It also uses “match-muslim” and “uk-muslim-match”. The UK intellectual property and enterprise court held that consumers could assume that Muzmatch’s offerings were somehow connected to Match. Consequently, Muzmatch could now lose the right to use its name. The platform has said however, that they will appeal the decision.
Match first wrote to Muzmatch about their alleged infringement in 2016, requesting them to desist. When this failed, Match Group sought to purchase Muzmatch making four offers up to $35 million but these were rejected. Muzmatch currently has 6 million users worldwide. US based Match Group is behind popular dating sites including Tinder, Match.com, Hinge and OkCupid.
9. HIGHWAY CODE MAKES WAY FOR AUTONOMOUS VEHICLES
The UK Highway Code is being updated to cover self-driving cars. People using self-driving cars will be permitted to watch TV on built-in screens, provided they remain ready to take control of the vehicle when prompted. Self-driving cars are currently not allowed on UK roads. Trials are ongoing and this could change by the end of 2022.
The code will also explain that users of self-driving cars will not face legal responsibility for crashes. In most cases, insurance companies will be liable for such incidents. This is in line with recommendations from the Law Commission. It is hoped that self-driving technology can reduce the frequency of accidents. 88% of road collisions involve some human error by drivers.
A full regulatory framework for self-driving technology is expected to be put in place by 2025. These updates to the Highway Code make a huge step forward in automotive technology. Self-driving vehicles are expected to add £41.7 billion to the UK economy and create nearly 40,000 new jobs by 2035.
10. T.M. LEWIN LEGAL BATTLE
Suit maker T.M. Lewin has been ordered to pay £439,000 in damages to staff over its decision to close 150 stores and fire 600 staff in June 2020. Former staff claimed that the company failed to consult them prior to dismissing them, despite being legally obliged to. Employment law requires firms to undertake a 45-day long consultation period before firing over 100 employees. An employment tribunal agreed that T.M. Lewin failed to do this and awarded £439,000 to the 101 staff who launched the legal action. T.M. Lewin is positioning to appeal the decision to the Employment Appeal Tribunal. They believe they have a strong case given previous case law. They argue that each store is a separate establishment so therefore the consultation requirement was not triggered. Whether this argument will be successful remains to be seen. T.M. Lewin fell into administration in June 2020 after the pandemic hammered its finances.