The week’s news included; Network providers accused of colluding to bring collapse of Phones 4U, Premier League clubs sue insurers, Netflix to cut 150 jobs, Tesla kicked off ESG S&P 500.
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:
- City A.M. – If firms want to go green then we should give shareholders the keys to their plans
- FT – Is Elon Musk too big to regulate?
- BBC News – Northern Ireland: Could the EU and UK face a trade war?
- The Guardian – How the narrative of full employment Britain hides the real story
1. GOOGLE SUED FOR USING NHS RECORDS WITHOUT CONSENT
Google is being sued for allegedly using the medical records of 1.6 million UK individuals without consent. DeepMind, Google’s artificial intelligence division, obtained the data in 2015 to test a smart phone app designed to detect kidney injuries. The Royal Free NHS Trust provided the data to Google and currently uses the app. This deal was already determined to be illegal in 2017 by the UK Information Commissioner’s Office (ICO). This initial investigation pertained to the Royal Free NHS Trust but now Google is facing legal action for its part. The claim is being brought by Andrew Prismall.
2. NETWORK PROVIDERS ACCUSED OF COLLUDING
Five major telecoms companies are being accused of colluding to put retailer Phones 4U out of business. Deutsche Telekom, EE, Orange, Vodafone and Telefonica all allegedly took part in the conspiracy by agreeing to stop selling their products at Phones 4U. These mobile network providers all pulled their products from Phones 4U within the space of a few months , ultimately causing the company to collapse in 2014. By removing Phones 4U as a middleman between themselves and consumers, the network providers could maximise profits. Phones 4U claims that “shadowy tactics” were used to undermine competition and put the company out of business. Some of these alleged tactics involved using burner phones to ensure no paper trails of discussions were created. All accused companies deny the allegations and argue that there is no evidence of collusion. The case is currently ongoing in the High Court.
3. PREMIER LEAGUE CLUBS SUE INSURERS
Major Premier League clubs are suing some of the largest insurers for failing to pay out on business disruption claims during the pandemic. This move comes after a ruling at the Supreme Court earlier this year paving the way for businesses to claim for losses directly incurred due to the pandemic and lockdown measures. 20 claimants are involved in the current case, including Arsenal, Liverpool, Tottenham and West Ham. The defendants listed in the filing are Allianz, MSAmlin, Aviva Insurance, CNA Insurance, Zurich Insurance and Liberty. Full details have not yet been disclosed but this will be an important case and could open the floodgates for businesses still recovering from the pandemic. We explore business interruption insurance legal issues in our previous article.
4. INFLATION CRISIS
Inflation in the UK has soared to a 40 year high, reaching 9% last month. The war in Ukraine has sparked a rapid rise in the cost of living. The war has drastically decreased the global supply of energy and key products used in food production like fertilisers. Consequently, gas and electricity, rising food and fuel prices have been the driving forces behind the increasing inflation rate. Governor of the Bank of England, Andrew Bailey, gave a stark warning about the rate of inflation and admitted there was not a lot the Bank could do about it. The rise in inflation is largely due to global inflationary pressures meaning domestic measures to help stem price rises are somewhat ineffective. There is growing pressure on the government to take action to help support households through this period. The UK Labour Party is calling for a windfall tax on oil and gas giants who have enjoyed record profits due to rising prices. Boris Johnson and Chancellor Rishi Sunak have rejected these proposals thus far but said they will look at all measures to help people with the crisis. We look at the merits of a windfall tax in our article.
5. CANADA BANS HUAWEI & ZTE
Canada has announced that it will ban Chinese telecom giants Huawei and ZTE from its 5G networks. The decision was taken on the grounds of security and to reduce reliance on Chinese tech. Canadian telecom companies will now be prohibited from Huawei or ZTE equipment and must now remove them if they have already been installed. Western countries have expressed concerns about Chinese tech companies as means of espionage for the Chinese government. Particularly with regards to 5G infrastructure, Western governments see using Chinese parts as a national security risk. Huawei said Canada’s decision was political and that it was disappointed by the news. This follows similar moves in the UK, US and Australia. We explored the Huawei ban in our previous article.
6. NETFLIX JOB CUTS
Netflix is to cut 150 jobs as concerns about subscriber numbers and revenue grow. For the first time in 10 years, Netflix posted a quarterly decline in user numbers and it expects a loss of 2 million subscribers in Q2. This decline is partly due its withdrawal from Russia along with customers cutting back on non-essentials due to rising inflation. Upon release of the news Netflix’s share price plummeted 35%. Netflix is the market leader in the streaming sector and boasts 220 million global subscribers. This recent decline however, has worried investors that the party is over in the streaming sector. Most job cuts at Netflix will be in its California headquarters, accounting for 2% of its North American staff.
7. TESLA KICKED OFF ESG S&P 500
Tesla has been removed from the ESG version of the S&P 500 stock index after concerns over its standards. The ESG S&P 500 is an index of the largest firms with strong commitments to high environmental, social and governance (ESG) standards. It highlights those companies which have performed well with regards to ESG matters. Recently, concerns were raised over discrimination at Tesla plants along with the company’s response to fatal issues with its vehicles’ self-driving systems. Although Tesla is at the forefront of the environmentally friendly shift towards electric vehicles, its social and governance standards are slipping. Consequently, Tesla has now been removed from the index. Despite this, Tesla and Elon Musk have long been critical of the ESG movement and Musk even called the ESG S&P 500 a scam. One of the reasons for the criticism is because oil and gas companies are topping the ESG lists despite their astronomical pollution and carbon footprints.
Tesla’s share price fell by 8% in response to the news and this could fall further. This is because some investment funds will be forced to sell Tesla stock. Funds which can only invest in ESG stocks on the index will no longer be able to hold Tesla stock.
8. MCDONALD’S SUED OVER BURGER SIZE
McDonald’s is being sued for $50 million for allegedly misleading customers as to the size of their burgers. A man in New York claims McDonald’s and Wendy’s engage in deceptive trade practices by making burgers in adverts appear larger than they are in reality. The lawsuit claims the fast food chains exaggerate the size by at least 15% in adverts. The claimant draws upon a number of complaints on social media but experts do not believe this will suffice to successfully claim damages. The claimant must show that adverts affected customers decision making and that they were tricked. He is seeking $50 million for himself and other customers. Burger King is also facing a similar lawsuit in the US. In the UK, Burger King had an advert banned due to complaints that sandwiches were much larger in adverts than in reality. Whether the case will be successful in the US remains to be seen.
This comes as McDonald’s announced that it would sell its business in Russia due to the war in Ukraine. It claims the war makes running operations untenable and goes against “McDonald’s values”. Outlets will be sold to local buyers and all McDonald’s intellectual property will be removed from sites. McDonald’s 62,000 Russian employees will continue to be paid until a deal is finalised. This puts an end to 32 years of McDonald’s operation in Russia following the fall of the Berlin Wall.
9. UBER TO LAUNCH SUBSCRIPTION SERVICE
Uber has announced that it will soon launch its own subscription service in the UK. Uber’s Uber One service is already operational in the US. Users pay a monthly fee to receive discounted fares on Uber’s ride-hailing app as well as free delivery on UberEats. Competitors Deliveroo and Amazon Prime both offer subscription services for food delivery so Uber is keen to keep up. The fee for the service in the UK has not yet been revealed. Uber has enjoyed strong revenue growth from the depths of the pandemic, posting $6.9 billion in the first quarter of 2022.
10. MORRISONS PAYS £190M FOR MCCOLL’S
Morrisons agreed to rescue convenience store chain McColl’s for £190 million. The total amount was revealed last week. The rescue package is worth £182 million and another £8 million was provided to unsecured creditors. The chain itself is worth just £3 million but it sits on a huge £160 million debt pile owed to senior creditors. Morrisons beat Asda’s owner EG Group to the purchase, offering over 50% more cash. McColl’s fell into administration earlier this month as it was reeling from the pandemic. This deal with Morrisons took the struggling chain out of administration and saved 16000 jobs at McColl’s.