The week’s news included; Supreme Court blocks second Scottish independence vote, Advertisers pull away from Twitter, Shell reviews UK investments after windfall tax expansion, Mercedes to launch subscription service for faster acceleration.
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:
- FT – Why Visa and Mastercard have yet to face their Kodak moment.
- City A.M – Musk’s Twitter takeover and the FTX collapse should end the founder cult
- BBC News – Why Donald Trump isn’t returning to Twitter (for now)
1. SUPREME COURT BLOCKS SCOTTISH INDEPENDENCE VOTE
The UK Supreme Court has ruled that the Scottish Parliament cannot unilaterally call for a second independence referendum. The Scottish National Party (SNP) has been demanding a fresh independence referendum following the 2014 vote to remain within the United Kingdom. They argue the Brexit vote, and the subsequent overwhelming support for independence from Scottish MPs have materially changed the circumstances. They believe these circumstances now warrant a new referendum. The UK government in Westminster has rejected calls for a new referendum. They argue the referendum was a “once in a generation” event and cannot be repeated so soon. In response to the government’s position, First Minister of Scotland and SNP leader, Nicola Sturgeon, announced that Scotland will unilaterally hold another referendum. A date for the referendum was provisionally set for 19 October 2023.
Last week however, the Supreme Court held that such a move would be unlawful, and another referendum would require the approval of the government in Westminster. Sturgeon said she accepted the decision but would not give up on the push for independence. She confirmed she would stand on a platform pledging independence at the next general election and will use this to demonstrate Scottish support for independence. Check out our article exploring what the economy of an independent Scotland would look like.
2. PENGUIN SCRAPS SIMON & SCHUSTER PURCHASE
Book publisher Penguin Random House has scrapped plans to acquire its rival, Simon & Schuster. The planned $2.2 billion deal would have created a publishing behemoth, holding nearly 50% of the market. The US Department of Justice lodged a lawsuit to block the deal, arguing that it would distort competition.
Last month, a court in the US blocked the deal, accepting the argument that the acquisition would weaken competition. This was largely with regards to the publishing rights of top selling books. While Penguin Random House believes the judge’s decision was wrong, the company confirmed that they will not appeal. Simon & Schuster is currently owned by Paramount. Due to the collapse of the takeover deal, Penguin Random House will have to pay a $200 million termination fee to Paramount.
3. CMA INVESTIGATES APPLE AND GOOGLE
The Competition and Markets Authority is launching an investigation into Apple and Google’s cloud gaming and mobile web browsers. There is concern that the two tech giants hold too much power within the fields. Some web developers have contacted the CMA and complained that Apple and Google’s policies are too restrictive, and the two companies have a duopoly in the market. 97% of mobile web browsing in the UK in 2021 was on browsers operated by Apple or Google. If the CMA’s investigation proves a breach of competition rules, then Apple and Google may need to make changes to their businesses.
4. ADVERTISERS PULL BACK FROM TWITTER
Advertisers appear to be pulling away from Twitter following Musk’s takeover. Over 30 of Twitter’s top 100 advertisers have not run a campaign on Twitter in the past two weeks. Musk took over on 27 October and cleared out the top executives and the board. He also introduced reforms to Twitter’s office work environment as well as the platform itself. The changes included an $8 monthly charge for a blue tick verification. He has also promised a new content moderation council and the removal of suspensions for all previously banned accounts that had not broken the law.
This appears to have spooked advertisers as 14 of the top 50 advertisers are thought to have paused their advertising campaigns. General Motors, Merck, Kellogg and Mondelez are all thought to be amongst those pausing their adverts. Musk is keen to make Twitter profitable and improve free speech on the platform. Losing too many key advertisers, however, may ultimately force him to change course.
5. SHELL TO REVIEW UK INVESTMENTS
Oil and gas giant Shell is reviewing its investments in British projects after the extension of the windfall tax announced in the budget. Jeremy Hunt raised the tax on excess profits of oil and gas firms from 25%to 35% in order to balance the books. Earlier this year, Shell announced a huge £25 billion package of new investment in the UK market. Last week however, the company said it would re-examine this due to the tax hikes. The new increase means the total tax on profits of oil and gas firms sits at 75%. It is important to note however, that this is heavily offset by relief programmes. As of November 2022, Shell has paid no windfall tax at all, despite generating £26 billion in profit this year. Despite this, Shell expressed that they need a fiscally stable environment to invest confidently. They will look on a case-by-case basis to see whether some of the projects will go ahead or not.
These comments are interesting as they mark one of the few major push backs against the windfall tax. Many commentators doubted that oil and gas firms would react this way, given the size of their profits. Shell made $9.5 billion in Q3 of 2022 alone. Furthermore, in October, Shell’s CEO recognised that governments may need to tax energy companies more to protect people from rising bills. But now, barely a month later after such taxes have been introduced, they are threatening to pull investment. Whether this announcement is political posturing or a genuine statement of intent to reduce investments remains to be seen.
6. FRASERS GROUP BUYS GIEVES & HAWKES
Mike Ashley’s Frasers Group has bought luxury tailor Gieves & Hawkes for an undisclosed sum. Gieves & Hawkes is a famous Savile Row tailor that has been operating for over 250 years. Its flagship store is based at Number 1 Savile Row in London. Gieves & Hawkes fell into problems after its owner fell into liquidation in 2021. The deal will now secure its future and save jobs at all five of its locations. Frasers Group is renowned for swooping in to rescue retailers in jeopardy. Its portfolio includes House of Fraser, GAME, HMV, Missguided and Jack Wills. The acquisition of Gieves & Hawkes will provide an upscale asset to the portfolio.
7. PRIMARK TO OPEN NEW STORES
Primark is planning to open four new stores over the next two years, creating 850 jobs. This forms part of a £140 million investment in its UK business. The new locations will be in Suffolk, Durham, Wiltshire and Northern Ireland. Existing stores in a variety of locations will be extended and some will move to more central locations to boost footfall. Primark has also promised not to raise prices despite a steep increase in supply costs. This comes after the launch of Primark’s new online click and collect service. A trial was launched across 25 stores and was so popular that the website crashed.
Primark’s investment announcement comes as welcome news and bucks the trend in retail. In the wider retail industry the cost of living crisis has hammered balance sheets and is seeing job cuts and closures. Primark’s seems well equipped to weather the storm and grow its business despite the wider economic uncertainty. Primark has 190 stores across the UK and employs 30,000 people.
8. HP TO CUT JOBS
Computer hardware maker, HP has announced that it will slash up to 6000 jobs over the next three years. The cost-of-living crisis has hammered demand for computers and personal tech. HP’s problems are compounded by the ongoing semiconductor shortage which has limited their output for the past three years. Like most tech firms, HP enjoyed a bumper period during lockdown as businesses and individuals rushed to buy new PCs and hardware. This bonanza is long gone, and tech companies are feeling the pinch. HP posted an 11% fall in fourth-quarter revenue to $14.8 billion. The company employs 50,000 people and the cuts will amount to roughly 12% of its workforce.
9. MERCEDES TO LAUNCH ACCELERATION SUBSCRIPTION SERVICE
Mercedes-Benz is to introduce an “Acceleration Increase” subscription service for speed boosts on its electric cars. Drivers will need to pay $1200 annually to see their cars accelerate from 0-60mph faster by one second. This subscription service will be available only in the US for Mercedes-EQE 350 and EQS 450 vehicles and their SUV versions. A Mercedes EQ 350 SUV will achieve 0-60mph in just 5.2 seconds with the boost, as opposed to 6.2 seconds. Mercedes has no plans to roll this out in the UK.
BMW introduced similar microtransactions earlier this year. Drivers would have to pay a monthly £25 subscription for heated seats and steering wheels. This particularly angered motorists as the BMW models are manufactured with these features as standard. The automaker was removing these features after production and putting them behind an additional paywall. Tesla has had a subscription package similar to Mercedes since 2019. Drivers can boost their Model 3 car’s 0-60 mph by 0.5 seconds for a one-time fee of $2000.
10. MANCHESTER UNITED SALE
The owners of Manchester United Football Club are reportedly exploring putting the club up for sale. Manchester United has been owned by the Glazer family since 2005 but over the past few years the club has under-achieved on the pitch. Manchester United has not won the Premier League since the departure of Sir Alex Ferguson in 2013 and have not won a trophy since 2017. Many fans blame the Glazer family’s lack of vision for the club, and this has led to protests at the stadium over the past few years. The Glazers are now reviewing options and could ultimately put the club up for auction. Investment bankers have been instructed to advise on the sale process. Tech giant Apple are reportedly exploring a £5.8 billion bid but nothing formal has been submitted.