The week’s news included; Apple facing lawsuit demanding £768m pay out to iPhone users, UK government proposals to reform GDPR & scrap no fault evictions for renters, Revlon files for bankruptcy.
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:
- Music Business Worldwide – Goldman Sachs: The Global Music Industry Is Going To Be Worth Even More Than We Thought.
- City A.M. – Even if Google’s chatbot isn’t sentient, we need to think seriously about AI
- BBC News – Why the Ukraine war may power Asia’s green energy shift
- City A.M. – Inside Britain’s food wars: exaggerated veggie claims risk a diet culture war
- CNBC – High-multiple, no-growth tech stocks will be dead for a while, says chief investment strategist
1. APPLE FACING $1BN CLASS ACTION
Apple is facing a £768 million ($940 million) class action lawsuit over intentionally slowing down older iPhone models. Up to 25 million iPhone owners could receive damages as part of the class action lawsuit. Apple released an update to users’ phones in 2017 that slowed down older models. The tech giant claims the change was necessary to preserve the batteries of these models which were unable to cope with new software. This practice was exposed and Apple later offered a discounted battery replacement service and allowed users to switch off the battery preservation system. This new lawsuit is brought forward by consumer campaigner Justin Guttman, claims Apple failed to properly inform customers about the impact of the update and about their remedial services. If successful, iPhone users may be entitled to compensation. Apple has already been fined in multiple jurisdictions over the issues. Most recently, Apple paid out $113 million in the US over the issue.
2. UK GOVERNMENT REVEALS DATA REFORM BILL
The UK government has released details on its Data Reform Bill which will replace the EU General Data Protection Regulation (GDPR). GDPR came into force in 2018 and introduced sweeping reforms for personal data rights. The UK government deemed GDPR to be unnecessarily bureaucratic and now seeks to introduce a more flexible regime. Under the proposals, data may be obtained more easily for scientific research and the data watchdog, the Information Commissioner’s Office (ICO) will be reformed. Businesses will no longer need to seek explicit consent from users at each instance to process their data. Larger businesses will no longer need to appoint a data protection officer (DPO) or conduct data protection impact assessments when introducing new products or services. The government hopes the changes will decrease red tape for businesses and save roughly £1 billion.
These reforms however are problematic for businesses who process data of EU persons. After Brexit, the UK secured a data adequacy agreement with the EU, meaning the EU considered the UK’s data laws as equivalent to its own, so data can flow seamlessly between jurisdictions. With these proposals to relax rules, this agreement could be scrapped. UK businesses will therefore, still be likely to be required to adhere to GDPR, regardless of domestic legislation, or face restrictions on the processing of data of EU persons. Check out our article explaining what GDPR introduced.
3. REVLON FILES FOR BANKRUPTCY
Revlon has filed for bankruptcy in the US. The cosmetic company has been hit by rising costs of production and supply chain disruption. It has now filed for Chapter 11 bankruptcy protection, allowing it to operate while discussions with creditors are ongoing. The company also expects $575 million from lenders to keep it running. Revlon blamed shortages and price rises of key raw materials for its struggles. As of March 2022, Revlon sat on a huge $3.3 billion debt pile. Revlon’s shares crashed 13% in response to the announcement and its shares are being removed from the New York Stock Exchange. The Guardian looks closer at Revlon’s history.
4. INTEREST RATE HIKE
The Bank of England has raised interest rates for the fifth consecutive meeting up from 1% to 1.25%. This brings rates up to the highest rate since January 2009. The Bank of England also issued a stark warning that inflation may surpass 11% later this year, up from its current 9%. Increasing interest rates is designed to stem inflation by cutting demand for goods and services in the economy. Three of the Bank’s Monetary Policy Committee’s nine members supported a steeper increase to 1.5%. Although rates have risen from the lows of 0.1% during the pandemic, at 1.5%, rates are still significantly lower than the 5% seen just before the financial crisis. Many analysts anticipate that the Bank will raise rates to 3% by the end of the year. Raising rates hits those on variable or tracker mortgages most significantly. Compared to just 7 months ago, average tracker mortgage holders are paying £115 more per month.
5. UK GOVERNMENT REFORMS
The government has announced new reforms for renters in England. Under the proposals, landlords will no longer be able to evict tenants without a reason. Furthermore, landlords must consider requests to allow pets. Specific rules have not been disclosed in the Renters Reform Bill although “no fault” evictions are already banned in Scotland so England could adopt the same model. In Scotland there are 17 permitted grounds for evictions, each with specific notice periods. If valid, a tribunal must give an eviction order before an eviction can proceed. Whether the same approach will be taken in England remains to be seen. In England, a private renters’ ombudsman will be established to settle disputes. There will also be strong powers to challenge unjustified rent increases and to obtain rent refunds for unsafe homes.
Last week, the UK government also scrapped its electric car grant. Until last week, drivers who bought plug-in electric cars benefitted from a £1500 grant towards the cost of buying the car. The scheme had operated since 2011 and applied to vehicles priced under £32000. In December 2021, the grant was cut from £2500 to £1500. Around 500,000 vehicles have been bought using the scheme. The government has said the funds will now go towards improving electric vehicle infrastructure. Motoring groups have staunchly criticised the decision claiming it would slow down the uptake of electric vehicles. This comes ahead of a ban on the sale of new petrol and diesel cars from 2030.
6. JP MORGAN WINS LAWSUIT AGAINST NIGERIA
JPMorgan has won a $1.7 billion lawsuit against Nigeria over claims that it negligently sent $875m to an account belonging to Dan Etete. Etete was a former oil minister in Nigeria and was convicted for money laundering. Nigeria used JPMorgan’s services and following an allegedly fraudulent scheme by Etete, it erroneously sent money to a company controlled by him. The West African nation then sued JP Morgan in 2017, claiming the bank had breached its Quincecare duties. Banks have a responsibility to ignore client instructions that appear they may result in fraud. Nigeria claims that JPMorgan negligently missed red flags regarding the transaction. The court however, rejected Nigeria’s claim as the judge deemed that the country had not proved that fraud had occurred. The payments were made amid a sale of ownership of the OPL245 offshore oilfield. Nigeria has said it is now reviewing its options and remains committed to its fight against corruption.
7. MCDONALD’S SETTLES TAX EVASION CASE IN FRANCE
McDonald’s has agreed a €1.2 billion settlement with French prosecutors over alleged tax evasion. The fast food giant was accused of shifting French profits to Luxembourg for 11 years from 2009. McDonald’s allegedly sent internal fees from French restaurants to foreign units to reduce its tax burden in France. France has the third highest corporate tax rate in Europe at 28.4%. McDonald’s agreed to settle the case but did not admit or deny liability. France has been keen to crack down on aggressive tax avoidance and tax evasions. Google paid $1 billion to France in 2019 over its transfers of profits to lower tax jurisdictions. As for McDonald’s, its tax and criminal cases will now be closed.
8. MISSGUIDED SCRAPS REFUNDS
Administrators of Missguided have said that customers due refunds from the company will not receive them. Missguided was bought by Mike Ashley’s Frasers Group for £20 million earlier this month and the deal is expected to be completed in August. The fast fashion company is still going through the insolvency process. Missguided is unable to pay its creditors and this is what sent the company into administration. Customer refunds are among the lowest level of creditors and often lose out when a company goes bust. Customers are now advised to make a claim during the administration process although this is no guarantee of success.
9. COINBASE CUTS
Cryptocurrency exchange Coinbase has announced that it will slash 18% of its workforce. The company anticipates a cryptocurrency winter and severe economic downturn. The cuts will see around 1100 jobs lost. This news comes amid a wider cryptocurrency downturn spurred by the war in Ukraine, rising interest rates and the cost of living crisis. The downturn is taking its toll on crypto investors and businesses alike.
Earlier this month, Coinbase announced a hiring freeze and rescinded a number of job offers. Coinbase management recognised that they had expanded too quickly during the economic boom and now needed to scale back.
10. AMAZON DRONE DELIVERY
Amazon has announced that it will start delivering parcels by drone for the first time later this year. The tech giant will offer its “Prime Air” services to customers in Lockeford, California, subject to regulatory approval. If this rollout proves successful, Amazon plans to expand nationwide. Lockeford is a suburban area with just 4000 people. Prime Air drones will be controlled by a person and will drop parcels in the back gardens of customers. Amazon had promised drone delivery since 2013 but faced numerous regulatory setbacks. It anticipates that drones will be able to make deliveries in under an hour.