The week’s news included; UFC and WWE to merge in $21bn deal, L’Oreal buy Aesop for $2.5bn, OpenAI goes on charm offensive after Italy bans ChatGPT, Google & Amazon struggle to sack European workers.
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:
- CNN – Wall Street says bad news is no longer good news. Here’s why
- City A.M. – From international trade to interest rates, macroeconomics is in yet another tail spin
- The Independent – What use is the CPTPP trade deal to Britain?
- CNN – The city without TikTok offers a window to America’s potential future
1. UFC AND WWE MERGER
The Ultimate Fighting Championship (UFC) and World Wrestling Entertainment) WWE are to merge in a huge $21 billion deal. UFC is the world’s largest mixed martial arts fighting championship while WWE is the largest wrestling brand. UFC’s parent company, Endeavor, is buying a 51% stake in a new entity which would hold the WWE and UFC brands. Existing WWE shareholders will hold 49% in the entity. Endeavor CEO, Ari Emanuel, and WWE’s executive chairman Vince McMahon will retain their existing roles with Endeavor and WWE. Emanuel will also become CEO of the new entity and McMahon will hold the role of executive chairman.
2. AMAZON’S IROBOT TAKEOVER UNDER REVIEW
Amazon’s $1.7 billion takeover of iRobot is now under review by the UK’s Competition and Markets Authority. iRobot produces the popular vacuum cleaner Roomba. The CMA is considering whether the deal will lessen competition in the smart home appliances sector. Amazon already holds a strong position with its Amazon Alexa, Echo smart speaker and Ring Doorbell all under its wing. Adding iRobot could reduce competitiveness in the field. US and EU competition authorities are also reviewing the deal. Amazon and iRobot are both cooperating with authorities. Roomba devices are autonomous vacuum cleaners that use sensors to navigate and clean users’ homes while avoiding obstacles. They retail from £249 but can cost up to £899.
3. LOREAL BUYS AESOP
Cosmetic giant L’Oreal is buying Australian brand Aesop in a $2.5 billion deal. Aesop specialises in luxury skin and body care products. It is currently owned by Brazilian firm Nature & Co. Natura & Co also owns The Body Shop and Avon. Aesop’s sales have grown exponentially over the past 10 years and hit $537 million in 2022. This deal marks L’Oreal’s largest ever takeover, leapfrogging its $1.7 billion acquisition of YSL Beaute in 2008. L’Oreal is the largest cosmetics company in the world and turned over €38.26 billion in 2022.
4. JOHNSON & JOHNSON OFFERS $9BN TALC-LAWSUIT SETTLEMENT
Johnson & Johnson (J&J) is offering a huge $9 billion to settle thousands of lawsuits alleging their talc-based products cause cancer. Over 40,000 lawsuits in North America have been lodged against J&J. The pharmaceutical giant had previously offered $2 billion to settle the case but this was rejected. In 2021, J&J had even transferred the claims to a newly created subsidiary and sought to put the entity into bankruptcy protection. The bankruptcy court however, deemed that the subsidiary was not in financial distress and J&J could not use bankruptcy to resolve the issue. J&J still rejects the allegations that its products caused cancer and calls the claims “specious”. It recognises however, that resolving the cases in court would be more expensive and time consuming than settling.
5. ITALY’S CHATGPT BAN
Italy has banned AI chatbot, ChatGPT, but its producer, OpenAI, is now beginning its charm offensive to resolve the concerns of the Italian regulators. Garante, Italy’s data protection watchdog, said that ChatGPT breached privacy rules by collecting masses of personal data without any legal basis. They also allege that ChatGPT failed to check the age of users. Consequently, ChatGPT was taken offline in Italy. OpenAI has now pledged to improve transparency around its data use and age verification. It has also sent proposals to Garante to help ease concerns about its data use.
OpenAI will be keen to stop privacy concerns spreading to authorities in other jurisdictions. EU regulators are already examining the situation to see whether more stringent rules are required to protect users. OpenAI is backed by Microsoft and its ChatGPT became the fastest application to hit 100 million users after hitting the milestone in just 2 months. Check out our article exploring the challenges and opportunities of AI.
6. TIKTOK FINED BY ICO
The UK Information Commissioner’s Office has fined TikTok £12.7 million for misusing children’s data. The data privacy watchdog found that TikTok had collected data from the 1.4 million children under the age of 13 who used the platform without parental consent. TikTok sets the minimum age to create an account at 13, however, this is easily bypassed. The social media giant has said that it had invested heavily to prevent underage children using the site. The ICO has said that TikTok’s failure may have exposed children to inappropriate content. The £12.7 million fine is however, a drop in the ocean compared to TikTok parent ByteDance’s £64 billion turnover in 2022. TikTok may face further challenges when the UK Online Safety BIll introduces new age verification requirements for social media sites.
7. APPLE WINS COMPETITION APPEAL
Apple has won its appeal against the Competition Market and Authority’s attempt to investigate the iPhone maker’s mobile browser and cloud gaming service. The CMA began a formal investigation over Apple and Google’s duopoly in the market. This stemmed from the CMA’s preliminary study which found competition concerns in December 2021. After its preliminary study however, the CMA did not take any further action as it anticipated new powers from the government. These powers never came. The government was engaged in the pandemic response then further scandals meant the CMA’s powers were left on the back burners. Ultimately, the CMA’s final report was published in June 2022 and its formal investigation was announced in November, under current powers.
The Competition Appeals Tribunal (CAT) however, ruled that the regulator had failed to adhere to statutory timeframes to open its investigation. The CMA had already decided not to take action after its initial study and there were no provisions entitling the CMA to revisit the matter. Consequently, the CMA can no longer launch its probe into the matter. The CMA has said it is disappointed in the decision and will consider its options.
8. GOOGLE AND AMAZON STRUGGLE WITH EUROPEAN LAYOFFS
After announcing tens of thousands of job cuts, Google and Amazon are now struggling to sack their workers in Europe. Worker protection laws in Europe mean they cannot be as easily dismissed as they have been in the US. French and German workers are now in limbo as the tech firms are engaged in negotiations with “employee interest groups”. Discussions will take place between employee representatives in order to resolve the matters. These negotiations however, can last for years in some cases. In France, Google is even requesting that workers leave voluntarily in return for favourable severance packages. Amazon is issuing a similar offer to senior managers in France.
The firing process in Europe is in stark contrast to the US. In the US, most employers can fire staff without notice for almost any reason, provided it is not on the basis of a protected characteristic (e.g. race, sex, age etc..). Google and Amazon are collectively firing over 40,000 people globally.
9. VIRGIN ORBIT BANKRUPTCY
Richard Branson’s Virgin Orbit has filed for bankruptcy after running out of cash. The satellite launch business was created in 2017 following the success of Virgin Galactic, Branson’s space tourism company. In January, Virgin Orbit had attempted its first satellite launch from the UK but this failed. Now, the company has failed to secure more funding to continue operations. Consequently, Virgin Orbit will slash 85% of its 750-strong workforce. Virgin Orbit is based in California and has filed for Chapter 11 bankruptcy protection to protect itself from creditor legal action. The company will now seek to find a rescuer.
10. OIL PRICES RISE
Oil prices soared last week after oil producing nations agreed to slash production. Saudi Arabia, Russia, Iraq and Gulf states agreed to cut production. Most countries agreed to cut production by one million barrels per day. For context, Saudi Arabia produced 10.95 million barrels per day in 2021. Brent crude oil prices jumped by over 6% to $85 per barrel. Analysts do not predict that this rise however, will lead to higher petrol prices for motorists. The Guardian explores the recent oil price rise in more detail.