The week’s news included; Musk to pull out of $44bn Twitter deal, Uber Files leak unearths shady practices, Kellogg’s loses product promotion lawsuit, Black cab drivers sue ride hailing firms.
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:
- Bloomberg – Tech Giants brace for Legal Mess of Abortion Data Subpoenas
- Lawcareers.net – Why are private equity funds starting to invest in sports clubs and leagues?
- Music Business Worldwide– When will TikTok start paying the music industry ‘properly’?
1. BORIS RESIGNS
Boris Johnson has resigned as the leader of the Conservative Party following mass resignations from senior staff and calls for him to step down. Johnson brought the Conservative Party its biggest Parliamentary majority since 1987 but scandal after scandal led to serious questions over his integrity and fitness to lead the country. Ultimately, the Chris Pincher affair led to the majority of his cabinet and MPs losing confidence in him. Over 40 ministers and aides quit in one day alone, a new record. Over 50 ministers ultimately handed in their resignations last week leaving Johnson’s position untenable. Last week, Johnson announced his resignation as Tory party leader but confirmed he will continue as prime minister until a new party leader is elected.
All bets are off as a number of Tory MPs have entered the race to replace Johnson. Former Chancellor Rishi Sunak is currently in prime position to replace Johnson. As his former chancellor however, many see Sunak as complicit in the dishonesty and poor culture under Johnson. He received a fixed penalty notice in the Partygate saga and is also marred with issues regarding his wife’s tax status. Minister of State Penny Mordaunt and Foreign Secretary Liz Truss are other strong potential candidates behind Sunak. Other leadership candidates include; Sajid Javid, Nadhim Zahawi and Grant Shapps.
Markets reacted positively, albeit modestly, to Johnson’s resignation with the FTSE 100 rising 1.1% and the FTSE 250 up 1.5%. Sterling showed no significant movement against the dollar following the announcement. The Premier League postponed its vote on a voluntary ban on shirt sponsorship by gambling companies. Gambling minister Chris Philp quit amid the flurry of resignations which will see a delay to the new white paper on gambling reform.
2. ELON MUSK CANCELS TWITTER TAKEOVER
Elon Musk has announced that he will ditch his $44 billion acquisition of Twitter. The eccentric billionaire blamed Twitter for failing to provide details regarding the numbers of fake accounts on the platform. Musk’s lawyers argue that the information provided about Twitter’s user numbers amounted to “false and misleading representations”. Twitter however, says it has provided the information requested through a “firehose” of real-time tweets and data.
The initial agreement included a $1 billion termination fee if Musk wasn’t able to raise funds for the deal or if Twitter found another buyer. But since Musk is arguing that Twitter made false representations, he evidently is not seeking to trigger this clause and aims to walk away for free.
Twitter has said however, that it will sue Elon Musk to force him to follow through with the deal. The social media platform will undertake legal action in the Delaware Court of Chancery. Musk mocked Twitter’s threatened legal action on his Twitter account. He jeered that the court will force Twitter to provide the account information that they allegedly sought to hide. Twitter’s shares sank 7% in response to the news.
3. UBER FILES LEAK
A huge leak of confidential documents showed that Uber used shady tactics to avoid investigations and even got secret support from global leaders such as Emmanuel Macron. Over 124,000 records were leaked containing conversations and emails between 2013 and 2017. Uber spent $90 million annually lobbying politicians to aid its disruption of traditional taxi services. From 2014, when French President Emmanuel Macron was minister of finance, Uber secured secret support from him to change France’s laws governing Uber’s services. This manifested itself in 2015 where Macron signed a new decree relaxing licensing rules for Uber drivers. Former EU digital commissioner Neelie Kroes agreed to join Uber before leaving her post and secretly lobbied for the company while in office, potentially breaching ethics rules. Prominent UK politicians were also involved. Boris Johnson during his mayorship was a prime target although he did not engage significantly with Uber due to their controversy. Undeclared meetings with Priti Patel, Sajid Javid and Michael Gove were also held.
Aside from the lobbying, Uber also operated a “kill switch” that cut access to Uber’s servers. This was designed to prevent authorities obtaining information during raids. Former CEO Travis Kalanick personally authorised the use of a kill switch during a police raid in Amsterdam.
Uber says it is a different company today. Kalanick was forced out in 2017 and was replaced by Dara Khosrowshahi who was tasked with reforming the company culture. Uber notes that 90% of current employees joined after Khosrowshahi took over and the overall culture has changed. This leak however, raises bigger questions about lobbying and the underlying interests of our politicians. Uber may come away relatively unscathed as it claims it has reformed. For the politicians involved, this may have significant political ramifications. BBC News looks at the leak in more detail.
4. CMA INVESTIGATIONS
The UK Competition and Markets Authority (CMA) was very active last week as it launched investigations into both Microsoft and Amazon. The CMA is exploring whether Microsoft’s $68.7 billion blockbuster acquisition of Activision Blizzard will harm competition in the UK. The regulator has until 1 September to either approve the deal or announce a further probe. The acquisition would bring huge franchises including Call of Duty, Candy Crush, and World of Warcraft under Microsoft’s umbrella. Microsoft’s acquisition would be the largest gaming deal in history as well as the largest all-cash acquisition ever.
Amazon is also facing investigation from the CMA. The CMA is exploring whether the tech giant is undertaking anti-competitive practices which harm consumers. There are concerns that Amazon gives advantages to its own retail business or sellers that use their services over other third-party sellers. This probe will explore the requirements for Prime sellers and how seller data is used. The CMA will see whether their practices are reducing choice and leading to higher prices for consumers.
5. KELLOGG’S PROMOTION COURT CASE
The High Court has ruled that Kellogg’s cannot offer promotions on its sugary cereals in supermarkets. New government rules ban promotions on products high in fat, sugar or salt. Kellogg’s challenged the government and argued that the nutritional value of milk mitigates the high sugar content in their cereals. They also argued that snacks like donuts and chocolate spreads were exempt as their sugar to weight ratios were lower but they are arguably more unhealthy.
The court rejected Kellogg’s argument as their cereals do not come with instructions saying they should be consumed with milk. Therefore, milk cannot be considered a part of the product itself. Common household brands such as Crunchy Nut, Corn Flakes and Fruit and Fibre will be affected by the rules. Kellogg’s will not appeal the judgement but have urged the government to reconsider. The new rules come into force in October. Additionally, products high in fat, sugar or salt will be banned from being displayed in prominent areas such as checkouts or store entrances. The government hopes the plans will limit consumption of unhealthy foods and generate £57 billion in health benefits.
6. FOOTBALL BOSSES CLEARED
A Swiss court has acquitted former FIFA president Sepp Blatter and former UEFA president Michel Platini. The men faced corruption charges stemming from a 2 million Swiss francs (£1.7m) payment from FIFA to Mr Platini that was uncovered in 2015. The pair said that the payment was a “gentleman’s agreement” that was struck in 1998. Platini was paid 300,000 Swiss francs (£118,000 at the time) per year between 1998 and 2002 but could not be paid more due to financial difficulties at FIFA. Blatter agreed to give Platini the rest of the salary at a later date. Prosecutors say this version of events is not true. The court however, accepted the defence’s argument.
Last year, FIFA banned Blatter from football for six years and eight months due to breaches of ethics rules. The pair have been under pressure since 2015 as US regulators launched an investigation into FIFA over bribery, fraud and money laundering allegations.
7. NIGERIA BLOCKED FROM JPM LAWSUIT APPEAL
Nigeria has been blocked from appealing a High Court decision which dismissed its $1.7 billion negligence claim against JP Morgan. The investment bank paid $875 million to a former oil minister, Dan Etete, who obtained the money through a fraudulent scheme. Nigeria claimed the bank breached its Quincecare duty. This is a bank’s responsibility to ignore instructions that appear that they may result in fraud. The High Court dismissed the claim (see previous top 10) and Nigeria was exploring an appeal. Last week however, the High Court deemed that Nigeria has “no real prospect” of overturning the judgement so blocked the appeal attempt.
8. NETFLIX ADS
Amid a downturn in the streaming sector Netflix has unveiled that it will now introduce adverts to a tier of its service. Netflix posted its first loss in a decade along with a loss of 200,000 subscribers. It predicts that it will lose 2 million subscribers in Q2 and is now scrambling to restore financial growth. The streaming giant has also slashed 450 workers over two rounds of cuts. Netflix will introduce a cheaper tier of its service which will contain adverts. In the UK, Netflix’s most affordable package costs £6.99 per month. It is anticipated that the ad plans will cost just £5 per month. Furthermore, users will not be automatically moved onto the ad plan but will have the option to do so. Competitor Disney also announced plans to introduce adverts to its Disney+ service. With the rising cost of living, streaming services will be among the first services that consumers cut back on. How well streaming platforms will weather the storm remains to be seen.
9. BLACK CAB DRIVERS SUE RIDE HAILERS
Black cab drivers have launched legal action against ride-hailing app Free Now. The United Trade Action Group (UTAG), which represents hackney carriage (black cab) drivers, claims that ride-hailing apps including Free Now, Uber and Bolt are operating illegally. UTAG claims that the law prohibits private taxi firms from “plying hire”. This means private hire taxis cannot roam the streets looking for business, only licensed black cabs. UTAG will argue that under the Metropolitan Public Carriage Act 1869, ride hailing firms are unlawfully driving around with the intention of responding to a hail. UTAG will now push for a judicial review of Transport for London’s decision to issue licences to ride hailing firms.
Ride hailing firms are going through a transformation period as unions and regulators try to improve standards. Last year, Uber was forced to provide drivers with employment benefits and consider them as workers. Bolt is also facing legal action from the GMB trade union to follow suit and ditch its self-employed contractor model.
10. TESCO AND HEINZ REACH RESOLUTION
Tesco has struck an agreement with Kraft Heinz following a pricing dispute which saw Heinz pull their products. The supermarket had sought to keep prices stable but Heinz wanted to hike prices by 30% as it has become more expensive to make its goods. This disagreement led to Heinz cutting its supply of popular household products like its baked beans, ketchup and tomato soup to Tesco. Last week, Tesco revealed that an agreement had been reached and Heinz products would be returning to stores. They did not however, disclose whether products will be going up in price. The cost of living crisis is hitting all parts of the economy and with the energy price cap set to rise again later this year things may get worse before they get better.