Happy New Year!
The week’s news included; Sunak to introduce anti-strike laws, Coinbase settles anti-money laundering investigation for $100m, FTC to ban non-compete clauses for workers, Channel 4 privatisation plans scrapped.
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. – As the nature of work evolves, we need fresh solutions to employment regulation that go beyond union membership
- BBC News – Are tech job cuts a warning for the wider economy?
- Standard – Three simple ways brands can get ahead with Web3 in 2023.
- City A.M. – Without proper financial education, this year will be a baptism of fire for Gen Z
1. ANTI-STRIKE LAWS
Rishi Sunak has unveiled new anti-strike laws that will limit the ability of public sector workers to withdraw their labour. The plans will see mandatory minimum service levels for the NHS, education, rail, fire and other public services. Workers will be sacked if the minimum service level is not met. Provisions have also been made to support employers who bring injunctions to block strike action or seek damages for unauthorised strike actions. The government says this action is to balance the right to strike and protect life and livelihood. The law is set to come into force within the coming weeks. This action has been staunchly criticised and is seen as infringing on the human right to withdraw labour. Unions have already threatened to take legal action against the government. Keir Starmer has said Labour would repeal the law if it came to power.
2. COINBASE SETTLES MONEY LAUNDERING INVESTIGATION
Cryptocurrency exchange Coinbase has agreed to pay $100 million to settle an investigation into the platform’s anti-money laundering controls. Coinbase failed to undertake adequate background checks on customers and maintain a “functional compliance program”, according to the New York Department of Financial Services (DFS). The investigation focused on their practices between 2018 and 2019. Coinbase said that the issues identified have been addressed. The $100 million settlement consists of a $50 million penalty and a $50 million investment in financial crime prevention within the company.
3. META FINED OVER DATA USE
Meta has been fined €390m euros over use of user data for targeted ads. The Irish Data Protection Commission (DPC) found that Meta’s methods of requesting consent for use of data both on Facebook and Instagram breached EU data law. Users are forced to consent to Facebook or Instagram respective data use policies or leave the platform. Meta now has three months to change its procedures. The tech giant has said however that it will appeal the decision. Meta is no stronger to regulatory fines in the EU. The company has already set aside €2 billion to cover EU fines for 2023.
4. TWITTER DATA BREACH
A major data security breach at Twitter has seen the email addresses and passwords of 200 million users stolen. The data was stolen over 12 months ago but has now been posted on the dark web. Email and login details were put up for sale at $2 per user. The stolen data also included phone numbers, names and user handles. While the original breach occurred months before Elon Musk’s takeover, there are concerns whether Twitter’s reduced workforce can adequately protect user data going forward. Musk fired around 30% of Twitter’s staff following his take over in October. More questions on the breach will certainly be raised in the coming weeks.
5. SHELL FEELS WINDFALL TAX
Oil and gas giant Shell is expected to take a $2 billion hit in the UK and the EU due to windfall taxes. This marks the first time Shell will pay UK corporation tax since 2017. Due to huge investments and the decommissioning of oil fields in the UK, Shell made no profits in the UK since then.
The UK and other European countries, such as Italy, have introduced windfall taxes on the bumper profits enjoyed by energy firms. The war in Ukraine saw wholesale energy prices soar and energy firms have seen record profits as a result. Shell posted a huge $9.5 billion in profit in Q3 2022 alone. The new Energy Profits Levy introduced by Jeremy Hunt raised the windfall tax to 35%. Oil and gas producers now face a total 75% tax burden on their profits. A breakdown of how much tax Shell will pay in the UK and EU has not been announced.
6. FTC TO BAN NON-COMPETE CLAUSES
The US Federal Trade Commission is seeking to ban non-compete clauses in employment contracts. Non-compete clauses typically restrict the ability of staff to move to a competitor company for a set period of time. This is designed to prevent the sharing of strategies and trade secrets. The FTC claims however, that these clauses exploit workers and hinder competition in the economy. Around 20% of US workers are estimated to be subject to a non-compete.
Predictably, there has been significant push back from the business community. The US Chamber of Commerce went as far to say that the proposals were “blatantly unlawful”. The FTC will now begin its rule-making procedure.
7. AMAZON TO CUT 18000 JOBS
Amazon has announced that it will slash a record 18,000 jobs as the cost of living crisis hits hard. The cuts are primarily affecting the e-commerce business. Amazon’s online store, Amazon Fresh and Amazon Go will all be affected. Human resources will also face cutbacks. Workers in the UK and EU are expected to be affected although exact details have not been disclosed. This is in addition to the previous announcement of 10000 job cuts in November, largely in its home electronics business.
8. CHANNEL 4 PRIVATISATION PLANS SCRAPPED
Plans to privatise Channel 4 have been dropped by the UK Culture Secretary, Michelle Donelan. Former Secretary Nadine Dorries had previously announced that the publicly owned broadcaster was to be sold off to allow it to compete with Netflix and Amazon. Although under public ownership, Channel 4 is commercially funded. Channel 4 gets almost all of its income from advertising and generated a £74 million profit for the public purse last year. This strong funding model made it very surprising that the government wanted to sell the broadcaster. Many suspected that political opposition to Channel 4’s content was behind the decision.
The announcement to scrap the privatisation plans has been widely praised. Channel 4 has a public benefit responsibility and this responsibility would be dropped if it was made private. Furthermore, a lot of ground-breaking political and creative content could be lost if it was made private. Michelle Donelan, said Channel 4 was a “British success story and a linchpin of our booming creative industries” and therefore should not be sold.
9. TRILLER SUED BY UNIVERSAL
Social media app Triller has been sued by Universal Music Group for unpaid licensing fees. Triller had agreed to pay $3 million to Universal for licensing and past use of its catalogue. This sum was to be paid over two years in quarterly instalments but Universal claims that Triller has not paid anything for the past three quarters. Furthermore, Triller also failed to provide usage data over the same period. Universal has said it has consequently terminated its agreement with Triller, barely two years of inking the licensing deal. It is now taking legal action for the unpaid fees.
Triller appears to be going through a challenging period. The company had also planned to go public by the end of Q3 2022. Q4 passed and Triller did not proceed with its IPO and it is unclear whether this will now happen.
10. BANKMAN-FRIED PLEADS NOT GUILTY
Former CEO of collapsed cryptocurrency exchange FTX, Sam Bankman-Fried, has pleaded not guilty to charges that he defrauded customers and investors. Bankman-Fried was arrested in the Bahamas and extradited to the US. He was released on a $250 million bail package.
Bankman-Fried is accused of taking FTX customer funds to fund his personal company, Alameda Research, and spend on luxury property and making huge political donations. He faces over 100 years in prison. Two of his colleagues have already pleaded guilty and are cooperating with authorities. The case goes to trial in October. See our article explaining the dramatic collapse of FTX.
