The week’s news included; Microsoft to invest billions in ChatGPT, Murdoch scraps Fox- News Corp merger plans, Boeing facing criminal trial over 737 Max crashes, Goldman Sachs CEO gets 30% pay cut amid market downturn.
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. – Paid-for blue ticks and tiny tweaks won’t make Musk’s Twitter profitable
- The Guardian – UK for sale: how the wealthy hold British property via offshore firms.
- Investopedia – Private Equity vs. Venture Capital: What’s the Difference?
- Sky News – How the North/South divide affects the U.K. economy.
- City A.M. – Charging for GP visits defies all the rules of healthcare economics
1. DOJ SUES GOOGLE OVER COMPETITION BREACH
The US Department of Justice (DOJ) has sued Google for allegedly breaching competition law. The tech giant is accused of harming competition in the online advertising market. Google allegedly pushes competitors out of the market, buys up rivals and uses its power to bully publishers and advertisers. Its conduct over recent years has involved anticompetitive, exclusionary and ultimately illegal tactics to attain its dominance in the online advertising space, according to the DOJ. Eight US states are also involved in this DOJ legal action against Google. CNN looks at the case in more detail and the potential ramifications.
2. MICROSOFT INVEST BILLIONS IN CHATGPT
Microsoft is set to invest billions in ChatGPT and boost its partnership with the creator. ChatGPT is an artificial intelligence chatbot that can provide human responses to any queries from users. The application can produce essays, speeches and information on practically any topic in any style. It scans the Internet for relevant data and creates an answer based on this . ChatGPT was founded by Sam Altman. Microsoft has already invested $1 billion in the application.
This investment shows just how big Microsoft is betting on artificial intelligence as the next major technological step forward. Google has recognised that AI’s ability to scrape the internet and provide advanced responses poses a huge threat to its own online search business.
3. MURDOCH SCRAPS FOX – NEWS CORP MERGER PLANS
Media tycoon Rupert Murdoch has scrapped plans to merge Fox and News Corp after significant investor opposition. The two entities split in 2013 following the phone hacking scandal at News Corp entities. 21st Century Fox was created as a separate entity controlling media outlets while News Corp held publishing and Australian broadcasting assets. Recently, Murdoch had sought to reunite the companies but shareholders rejected the proposals. Now, the committees reviewing the proposals have been dissolved and the plans to reunite the entities have been formally withdrawn.
Murdoch’s News Corp owns over 100 media entities globally. Under the umbrella are companies such as The Sun, The Times, The Sunday Times, the Wall Street Journal, Dow Jones & Company and Talk Sport. Even TV stations like Nickelodeon are owned by News Corp, albeit jointly with Paramount Global. 21st Century Fox was ultimately bought by Disney in 2019 for a huge $71 billion. Rupert Murdoch is 91 years old and is worth an estimated $17 billion.
4. BOEING FACING FRAUD LAWSUIT
Boeing is in court defending itself from fraud charges over the failure of its 737 Max aircraft. Serious technical issues with the model caused two crashes, killing 346 people. Relatives of the deceased are suing Boeing as they claim the $2.5 billion settlement with the US Department of Justice failed to hold Boeing criminally accountable. Families of the deceased received $500 million, Boeing accepted civil responsibility but the aerospace giant avoided trial. Families of the deceased however allege that victims of the crashes were “crime victims” as Boeing management knew of the fatal technical problems but ignored them. Consequently, they are reopening the settlement and bringing Boeing to trial to face criminal charges.
The US Department of Justice says the initial Deferred Prosecution Agreement was appropriate because successfully proving criminal conduct beyond reasonable doubt was unlikely. In order for Boeing to be held criminally liable the plaintiffs must prove beyond reasonable doubt that Boeing’s conduct directly led to the two crashes. Last week, Boeing told the court that it was not guilty of concealing information on 737 Max flight control systems. We will be following this case as it develops.
5. GOLDMAN SACHS CEO GETS PAY CUT
The CEO of Goldman Sachs, David Solomon, has had his pay packet cut by 30% as the investment bank’s profits decline. Goldman recently posted a 50% drop in profits to $50m as M&A activity slows globally. The bank also recently announced that it would cut 3200 jobs. Most of these jobs were lost in its investment banking division. David Solomon saw his 2022 pay packet drop to $25 million, down from $35 million last year. His 2022 pay consists of a $2 million base salary and $23 million in bonuses.
6. LIDL SUED BY SUPPLIER
Lidl is being sued for £2.7 million for allegedly “destroying” one of its fruit and vegetable suppliers. The discount retailer allegedly cancelled and reduced orders from Proctor and Associates without sufficient notice. Lidl then also reportedly poached Proctor’s own suppliers. These cancelled orders caused the business to collapse. Proctor had been a supplier of Lidl for 20 years and was one of Lidl’s early UK suppliers. Lidl opened its first UK store in 1994. At this time, most suppliers were reluctant to supply discount stores. Proctor’s founder Deane Proctor feels betrayed by Lidl and is now taking legal action.
7. ASDA JOB CUTS
Asda is reportedly planning to cut 300 jobs and slash the pay of 4300 staff. Over 4000 staff would lose out on the additional £2.52 per hour they receive for working nights. This is due to the moving of the time of restocking of packaged groceries and frozen food to daytimes and evenings. Seven in-store pharmacies will close putting 62 jobs at risk. A number of other changes and cuts will be introduced. The changes are designed to improve efficiency and boost growth. A consultation period is now beginning. This comes after the Issa Brothers and private equity firm TDR Capital bought Asda in 2020 for £7 billion. Asda is the third largest supermarket in the UK after Tesco and Sainsbury’s.
8. BANKING HUBS SET UP
New banking hubs are being set up in the UK amid a rapid closure of bank branches. These hubs will allow customers of a variety of banks to deposit and withdraw cash at one location. Nine new hubs were announced last week, most of which are in the Midlands and North of England. In January 2023 alone, banks earmarked 87 branches for closure, with more inevitably on the way. Banks say this is due to weakened customer demand and footfall over the past few years. Many customers however, struggle to make deposits or large withdrawals due to a lack of readily accessible branches in their local areas. It is hoped that these new hubs will plug the gap left by the branch closures in a financially stable way. The hubs will primarily be run by the Post Office. Plans for 38 banking hubs have been outlined in the UK.
9. AMAZON STAFF STRIKE
Last week, Amazon workers went on strike in the UK for the first time. Workers at Amazon’s Coventry warehouse took industrial action over pay and conditions. The workers are affiliated with the GMB Union and constitute 300 of the 1400 warehouse strong workforce. They are demanding a pay increase to £15 per hour. This uplift would bring them roughly in line with US warehouse workers who earn $18 per hour. Additionally, they seek better conditions. Workers currently complain of ultra strict performance management where even their time in the toilet is closely monitored. Last year, Amazon offered UK staff a 50p pay rise up to £10.50. They noted that this was a 29% increase from 2018 wages and they receive many other benefits. Amazon posted a £204 million profit in the UK last year.
10. SPOTIFY JOB CUTS
Spotify is set to slash roughly 600 jobs as it braces itself for economic slowdown. The cuts amount to roughly 6% of its workforce and will set the company back up to €45 million in severance costs. In the mid-term however, this will bring millions in savings to the Sweden based streaming giant and create a leaner structure that can withstand a declining economy. As the cost of living crisis bites consumers, services like Spotify and Netflix are the first things people cut back on. With a global recession looming job cuts within the tech sector as becoming ever more common. Apple remains the only big tech company who avoided cuts by the CEO, Tim Cook, taking a huge $50 million pay cut.
