The week’s news included; Musk facing trial for misleading investors, Tech giants cut thousands of jobs, M&S to invest £500m in stores, CMA launches inquiry into Asda’s Co-op forecourt takeover.
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. – Worried ChatGPT will steal your job? You’ll have to out-think artificial intelligence
- BBC News – Should China worry about its shrinking population?
- Sports Pro Media – How the NBA’s evolving media strategy is driving international audience growth.
- City A.M. – Tech bosses behind bars? The chances are vanishingly slim under new online safety laws
1. ELON MUSK FACING TRIAL FOR MISLEADING INVESTORS
Elon Musk and Tesla are facing trial over the CEO’s 2018 tweet that he had secured funding to take the electric car maker private. It transpired that funding had not been formally secured and Musk dropped the plans barely three weeks after his initial tweet. Tesla shareholders allege they were collectively defrauded out of billions of dollars by Musk. Many of them either bought or sold shares based on these tweets. A jury will now consider whether Musk’s tweets influenced investors and whether damages should be granted to affected shareholders. Musk had already been reprimanded by regulators as he faced a $40 million fine and was forced to have his tweets vetted by lawyers prior to sending (see previous top 10).
2. TECH SECTOR JOB CUTS
The bloodbath in tech continues as Microsoft, Alphabet and Amazon slash thousands of jobs. The tech sector has cut nearly 200,000 jobs since the start of 2022 and the trend seems to be worsening.
Microsoft has announced that it will cut 10,000 jobs. Like many electronic and software retailers, Microsoft enjoyed a bumper period during the pandemic but demand has since fallen. Furthermore, the cost of living crisis has weakened consumer appetite for electronics and digital purchases. These cuts across for under 1% of its 220,000 strong global workforce.
Alphabet also slashed 12000 jobs, cutting 6% of its workforce. The parent company of Google will be cutting roles globally, particularly in recruitment and engineering. The exact breakdown of cuts has not yet been revealed. Like its competitors, Alphabet overspent during the tech boom of the past two years and is now needing to scale back.
Amazon also announced that its latest round of cuts has begun. This will see up to 18000 workers, primarily in their human resources departments and physical stores, lose their jobs. This follows a cut of 10,000 staff in November, primarily in their electronics divisions. Amazon’s growth has been stunted by falling demand since the peak of consumer appetite during pandemic.
3. M&S TO INVEST £500M IN STORES
Marks and Spencer (M&S) is set to splash nearly half a billion pounds on new UK investment. The retailer will spend £480 million on 20 new and improved stores, creating 3400 jobs. The investment will take place within the next financial year and forms part of its five-year growth plan. M&S has said strong performances at its relocated and renewed stores has given it confidence to make this huge investment. This comes at a time where high street retailers are slashing jobs and closing stores due to reduced customer footfall. Even M&S itself had to shut stores last year. New stores will open in major cities while other stores will see an expansion.
4. CMA INVESTIGATES ASDA CO-OP FORECOURT TAKEOVER
The UK Competition and Markets Authority has launched an inquiry into Asda’s £600 million takeover of Co-op petrol stations. In October last year, Asda took on Co-ops petrol stations and 129 convenience stores.
Asda is, however, owned by the Issa Brothers. They are behind EG Group which owns hundreds of petrol forecourts in the UK. The CMA is now considering whether this deal will harm competition in the sector. The decision of the inquiry is due by March 14. The CMA may decide to escalate the matter to a phase two inquiry.
5. INFLATION FALLS
UK Inflation dipped marginally in December to 10.5%. This figure is promising but we are still far off an ideal level. Inflation fell 0.2% compared to November and analysts believe we are past the worst of inflation. October 2022 saw the highest rate of inflation since the 1980’s at 11.1%. Rising food and fuel prices have been the driving factors behind the high rates of inflation. It is worth noting however, that the Bank of England’s target rate of inflation is 2% so we may not see an immediate decline in interest rates, even if inflation falls substantially.
6. ICO TO CHANGE DATA PROTECTION CULTURE
The UK’s Information Commissioner’s Office has announced that it will change its approach to in dealing with corporate data protection. The data watchdog said it will now look to adopt a preventative approach to data protection rather than issuing large fines after a breach. This will be done by amending the UK’s privacy laws to make them clearer. It would mark a divergence from the EU’s data policies and their general approach to fines. The head of the ICO has said he wants to turn the organisation into the “effective, modern, empowering regulator we want it to be”.
The one challenge that lies ahead with these reforms is ensuring that they meet EU adequacy standards. If the UK’s data protection rules are not as robust as the EU’s GDPR, this could prevent the transfer of data between the UK and EU without significant additional red tape. An oversimplification of data rules could have the opposite of the intended effect and make the burden on companies more difficult than ever.
7. TIKTOK SEEKS TO AVOID US BAN
TikTok has begun its charm offensive to US lawmakers to prevent a ban throughout the country. FBI Director Christopher Wray identified TikTok as a national security risk. This is due to the perceived control that the Chinese government has over TikTok and its owners along with a lack of transparency in TikTok’s data collection and sharing practices. Lawmakers swiftly moved to ban the app, owned by Chinese tech giant ByteDance. 20 states have already agreed to orders that ban US government officials from downloading TikTok on their devices.
TikTok has now offered greater transparency over its data collection and algorithms. It will also submit itself to greater oversight in the US. Whether these proposals will be enough to alleviate concerns remains to be seen.
8. PII INSURANCE SENDS LAW FIRMS UNDER
Insurance policies in the legal sector have become increasingly difficult to obtain and this has tipped some companies over the edge. Accounting firm Hazelwood published data showing that 9 UK law firms collapsed in Q3 of 2022 alone, after being unable to secure professional indemnity insurance (PII). All private practice firms are obligated to have PII to protect them against negligence claims and ensure clients can be compensated.
The PII sector however, is unprofitable for insurers and after taking huge hits during the pandemic, many are stopped offering it. Consequently, premiums have risen and it is harder to obtain PII at a viable price for some firms. Conveyance firms are most acutely affected given that they deal with many high value properties and claims can be common in the sector. Law firms typically pay around 5% of their turnover on PII whereas, it’s nearly 20% for conveyance firms. High premiums seem set to stay as there is limited appetite for insurances to enter or return to the market.
9. GENESIS COLLAPSE
Cryptocurrency lender Genesis has filed for bankruptcy after being hit by the collapse of FTX and Luna last year. The cryptocurrency firm’s real troubles started in June following the collapse of Luna (see previous top 10). This collapse meant one of its large debtors, Three Arrows Capital, also went into bankruptcy, owing Genesis $1.2 billion. Genesis was also exposed to the FTX collapse and was hit hard. Earlier this month, Genesis already revealed that it was cutting 30% of its staff. Last week, the Securities and Exchange Commission charged Genesis with the illegal sale of cryptocurrency (see SEC website).
10. LLOYDS BRANCH CLOSURES
Lloyds Banking Group is set to close 40 branches of Lloyds Bank and Halifax branches. As footfall continues to dwindle at bank branches, thousands of sites have closed at almost all major retail banks. Lloyds noted that visits to its branches have plummeted by 60% in the past five years alone. Earlier this year, TSB and Barclays also collectively announced over 20 branch closures. Affected customers are now advised to use ATMs or Post Offices for their banking needs. Since 2015 over 5000 bank branches have closed across the UK.