The week’s news included; Musk to receive Twitter data on fake accounts as $44bn deal in jeopardy, Paramount facing copyright lawsuit over Top Gun sequel, Mishcon de Reya shelves IPO plans, Man fined £1m over illegal EPL streams.
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:
- The Fashion Law – How Brands Like Nike and Prada Are Using NFTs – and What Could Go Wrong.
- Bloomberg – Unprofitable Fintechs at Risk of Laying an Egg
- City A.M. – The SPAC bubble is bursting, argues Syz Bank’s investment chief: ‘Companies are on average down 60 per cent’.
- Forbes – How Sports Ownership Differs From That Of Other Businesses.
1. MUSK TO RECEIVE TWITTER DATA
Twitter has agreed to provide Elon Musk with raw data on the number of fake accounts and bots on the platform. Last week, Musk threatened to pull out of the $44 billion deal unless the social media platform provided more data. Musk expressed concerns that Twitter overestimated the number of legitimate accounts and put the deal on hold last month. Twitter had represented that only 5% of accounts were bots but Musk suspects the number may be higher. Although the deal to buy Twitter was legally binding, it has a $1 billion break clause, meaning Musk could quite comfortably walk away from the table. Musk has also suggested discounting the purchase price based on the true number of bots. Twitter will provide a “firehose” of data which involves sending real-time records of the 500 million tweets posted daily, the devices users use and their non-private account details. Check out our article exploring Musk’s proposed acquisition of Twitter and the reasons behind it.
2. CMA TO LAUNCH APPLE & GOOGLE INVESTIGATION
Apple and Google are facing investigation from the UK Competition and Markets Authority over their dominance of the mobile ecosystem. Through an initial investigation, CMA found that the tech giants have a “stranglehold” on the market and essentially have a “duopoly”. Apple and Google have a 90% share of the UK mobile browser market with users defaulting to Google’s Chrome or Apple’s Safari. The CMA finds their dominance concerning and warns that without action, the two companies could stifle competition and harm innovation. The watchdog will now consider whether to launch a deeper investigation into the tech firms. Regulators across the world have big tech firms in their cross hairs as their dominance has swelled over the past years. The CMA alone has eight open competition cases against big tech firms and a new specialist unit is set to be established. Big tech firms will be forced to adapt to this changing regulatory regime.
3. BREXIT’S ECONOMIC COST
The Centre for European Reform (CEF) revealed that the first year of Brexit has significantly contributed to a £31 billion hit to the UK economy. Figures showed that by the end of 2021 the economy was 5% smaller than it would have been if the UK had stayed in the EU and the pandemic had not happened. This was based on CEF modelling of the performance of the UK economy in the absence of these two factors. While they established that the pandemic had a significant impact, they found that Brexit had the bigger negative impact. This is because COVID-19 restrictions in the UK began lifting by summer 2021 but the challenges from Brexit have remained consistent. The economic impact of Brexit has been driven by the additional red-tape required to do business with the EU. Furthermore, in many instances companies are completely unable to serve EU customers due to restrictions. Trading with EU clients now takes long and is more cumbersome and this is severely affecting businesses.
4. PARAMOUNT SUED OVER TOP GUN SEQUEL
Film studio Paramount Pictures is being sued for breach of copyright over its recent Top Gun: Maverick film. Israeli writer Ehud Yonay wrote “Top Guns” in 1983 and his heirs claim Paramount used this material without permission. Top Gun: Maverick is a sequel to the 1983 action film Top Gun with both films starring Tom Cruise. The lawsuit was filed in Los Angeles by Yonay’s widow and son and they are seeking undisclosed damages and profits from the film. Yonay’s family claim that they had informed Paramount that their rights to use Ehud’s work would expire in 2020. Paramount says the claim is without merit and will fight the claim. Top Gun: Maverick made $548 million in its opening 10 days, making it the fourth highest grossing film released since COVID-19.
5. MAN FINED £1M FOR ILLEGAL EPL STREAMS
A British man has been fined nearly £1 million and jailed for selling illegal streams of Premier League football matches. Steven King was prosecuted as part of a wider investigation into an illegal streaming site, Dreambox. The investigation was led by the Premier League and the Federation Against Copyright Theft (FACT). King was first found guilty of conspiracy to defraud in 2019 and was sentenced to seven years and four months. Last week however, the court ruled he must pay back any proceeds he made from the illegal venture, totalling £963,000. Failure to pay this sum within three months will see his sentence extended by six years and eight months, bringing his total sentence to fourteen years. The Premier League confirmed that it will not claim any proceeds and that the funds can go to the public coffers.
6. FCA SIGNALS GREENWASHING CLAMP DOWN
The Financial Conduct Authority (FCA) has announced that it is actively monitoring firms’ marketing to identify greenwashing. Greenwashing involves making misleading or false environment, social and governance (ESG) representations to investors. With investor interest in sustainable and responsible investments at an all-time high, it is important that representations are true and accurate. The FCA is now considering whether new rules are required for the marketing of sustainable products and making claims about ESG. This announcement follows a raid by German regulator BaFin on Deutsche Bank’s asset management unit, DWS, over false ESG claims around investments (See previous top 10).
7. MISHCON SHELVES IPO PLANS
Mishcon de Reya has indefinitely suspended plans to launch an IPO. The law firm cited the volatility of markets as the reason for the decision. Rising inflation, interest rates and the war in Ukraine have sent stock markets into a tailspin. Tech heavy exchange NASDAQ is down 28% in 2022 alone while the UK’s FTSE 100 has also declined. Other listed law firms have also been hammered. Ince and Co’s share price has tanked 76% in the past year, while Knights is down 67%.
Mishcon has said the plans have not been totally abandoned but the firm will not float for the foreseeable future. Mishcon would join just six other UK based firms that are listed on a stock exchange. These firms are: DWF, Gateley, Ince Group, Keystone Law, Knights,and Rosenblatt.
8. RAILWAY STRIKES
Thousands of transport workers belonging to the RMT Union and Aslef union are set to strike in June and July in what is considered the largest rail strike in modern history. Over 40,000 workers from Network Rail and 13 train companies as well as thousands of train drivers are set to walk out. RMT staff will take strike action over pay and redundancies on 21, 23, and 25 of June. Network Rail plans to cut 2500 jobs including for essential railway maintenance staff. The staff are striking in response to these measures.
Certain train drivers of Aslef will also strike on 23, 26 June as well as 13 and 14 July. Aslef represents train drivers and claims that drivers have not had a pay rise since 2019 despite a steep increase in the cost of living. It claims such a pay freeze for drivers is unwarranted given that the train companies are making strong profits and are paying out dividends for shareholders. The strike action will cause severe travel disruption across the country and adversely impact hospitality and entertainment firms.
9. APPLE TO LAUNCH BNPL SERVICE
Apple has announced that its new operating system, iOS 16, will feature a buy-now-pay-later (BNPL) service. Users of Apple Pay will be able to spread the cost of purchases over six weeks in four payments. The service will be free and no interest will be charged, as is common with BNPL services. BNPL companies charge retailers a commission of 2% to 8% of the purchase amount. Apple’s service will initially launch in the US and they have not yet confirmed whether the service will be available for UK users.
BNPL firms in the UK have come under fire for setting inadequate safeguards for customers. Firms are accused of providing credit to customers who cannot afford it. Apple’s announcement could not have come at a worse time for fintech firms for Klarna and PayPal. The cost of living crisis has meant people are shopping less so BNPL transaction numbers are declining. Klarna has even cut 10% of its workforce due to the challenging economic environment. A huge new competitor like Apple will compound their problems.
10. ASOS LAUNCHES PHYSICAL STORE
Asos has launched its first ever physical store in the US. The fast fashion giant revealed its first in-store collection in collaboration with Nordstrom. Asos products will be available in 10 Nordstrom stores in LA, New York, Dallas and Chicago. Nordstrom will also provide a service allowing customers to make customisations and alterations to their Asos clothes. A new range of Asos styles will be released each month. This agreement furthers the cooperation between Asos and Nordstrom. Topshop launched in Nordstrom last year after being purchased by Asos as part of a £330 million deal.