Top 10 Stories of Last Week! 10/07/2023

The week’s news included; Microsoft Activision Blizzard $69bn merger shows signs of hope, Shein faces RICO charges due to “aggressive” IP infringements, High Court rules using agency staff to cover strikes is unlawful .

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. – The combined power of AI and WhatsApp could wreak havoc for the next election
  • Sports Pro Media – Why it doesn’t make sense for the Premier League to abandon the 3pm blackout… yet.
  • The Guardian – Brexit import controls: is the UK ready and will they push up prices?
  • CNBC – WHO decision on aspartame could hurt diet soda sales or lead to new drink formulas
  • City A.M. – Cynical investors trading off of the ESG wave have burst a sustainable finance bubble

1. MICROSOFT-ACTIVISION BLIZZARD MERGER

It was a busy week for Microsoft and Activision Blizzard in their attempt to complete their $69 billion merger. A US federal judge denied the attempt to block the deal by the US Federal Trade Commission (FTC). The FTC sought a preliminary injunction to block the deal as it believes market competition will be harmed. The court however, did not believe that the FTC would win its case or that there was a likelihood that competition would be harmed. Based on this, the motion was denied. The battle is not over as the FTC has said it will appeal this decision. Microsoft confirmed that it will continue to fight the case.

In the UK, the Competition and Markets Authority decided to extend the deadline of its review to 29 August. This will give it more time to hear from the concerned parties. Microsoft will also have an opportunity to restructure the deal to address the CMA’s concerns. The CMA initially blocked the deal on the grounds that it would harm competition. It appears the CMA has softened its stance and is opening a path for the deal to go through. The initial concessions and pledges made by Microsoft did not go far enough for the CMA. Whether Microsoft can, or is willing to give up more ground remains to be seen. 

Microsoft and Activision Blizzard already have approval in the EU. Gaining US and UK regulatory approval are the last remaining major hurdles. 

2. SHEIN FACING RICO CHARGES

Chinese fashion giant Shein has been hit with a copyright infringement and racketeering lawsuit. Shein is facing charges under Racketeer Influenced and Corrupt Organizations Act (RICO), a law initially introduced to target organised crime bosses. Racketeering is the acquiring of business through illegal activity, such as theft or intimidation, or using a business to commit illegal activity. Shein releases up to 6,000 new styles every day. By comparison, Boohoo releases 18,000 new styles a year. Independent fashion designers accuse Shein of using complex algorithms to steal designs. Shein then produces those designs in sweatshops and sells them for a fraction of the price. Furthermore, they accuse Shein of using shell companies to avoid accountability. This “egregious copyright infringement” constitutes racketeering, according to the plaintiffs. A lawsuit has been filed in California against Shein. The designers involved are seeking unspecified damages and injunctive relief.

Shein is the world’s largest fashion company and hit a $100 billion market cap in April 2022. It has, however, come under intense scrutiny following evidence of inhumane working conditions in its workshops.  A recent report showed workers are paid 3p per garment and work 18-hour days. Workers can be docked two-thirds of their daily wages if they make a mistake or if garments are returned by customers. 

3. AMAZON CHALLENGES EU DSA

Amazon has launched a legal challenge against the EU’s Digital Services Act. The tech giant claims they are being discriminated against. The Digital Services Act introduces strict new rules for tech companies to follow. This includes the removal of disinformation and illegal content, as well as the safeguarding of children. Search engines and Social media companies like Google, Facebook and Twitter will bear the brunt of the rules. However, Amazon’s advertising platform and customer review section on its website brings Amazon into scope, according to the EU. The Digital Services Act categorises Amazon as a very large online platform. Therefore, Amazon will be required to more strictly moderate its online platforms. Amazon claims this is a miscategorisation. Furthermore, Amazon claims that other large retailers with an online presence are not caught by the new law. Despite this claim, both Google’s online shopping division and fashion retailer Zalando will both be caught by the new law. Amazon has filed a petition at the European Court of Justice. The EU Commission has said that it will defend its position in court.

4. HIGH COURT RULES ON AGENCY STAFF

The UK High Court has ruled that it is unlawful to hire agency staff to cover for striking workers during industrial action. The UK government introduced new legislation that would allow them to hire agency staff where public service staff members went on strike. This was introduced by then-Business Secretary Kwasi Kwarteng in July 2022. Under the previous law, this practice was a criminal offence. 13 trade unions took legal action against the new piece of legislation. They argued that the legislation undermines the right to strike and puts the public at risk. Now, the High Court has found that the introduction of this law was invalid as trade unions were not consulted prior to implementation. The Court called the failure to consult unions “so unfair as to be unlawful and, indeed, irrational”. Consequently, the new law has been repealed. The UK government is considering its next steps. 

5. CHATGPT MAKER PROBED OVER FALSE ANSWERS

OpenAI, the maker of ChatGPT, is being probed by US regulators. There is concern that ChatGPT poses a significant risk to consumers by producing false or misleading answers. Generative AI systems produce answers based on data it is fed. Developers however, have limited control over what data AI systems use to respond to specific questions. This results in AI responses that are misleading or even dangerous in some cases. The US Federal Trade Commission has requested information from OpenAI on how it addresses these risks. OpenAI have said they will work with the regulator. 

This comes as Google launched its own AI rival to ChatGPT called “Bard” in Europe and Brazil. The new system had already launched in the US earlier this year. Bard works in the same way as ChatGPT, it can generate human-like responses to queries as well as perform advanced tasks. 

6. PUBLIC SECTOR PAY RISES

Public sector workers are finally getting a pay rise after more than a year of industrial action. The government accepted the recommendations of independent pay review bodies. The following public sectors will receive the following pay rises:

  • Police and prison officers – 7%
  • Teachers – 6.5%
  • Dentists, GPs, consultants and junior doctors – 6% + £1250 one-off payment for junior doctors
  • Armed Forces – 5% and £1,000 one-off payment

The pay increases still fall short of demands from workers. In the case of junior doctors for example, they requested a 35% increase to compensate them for years of real terms pay cuts. Furthermore, inflation sits at 8.7% so all proposed increases fall beneath this. In the private sector wages rose by 7.3% in the three months to May 2023, so the proposals are not too far off the private sector.

The total cost of this package will be £5 billion and it covers around 45% of the public sector. Most civil servants however, are not included. These pay rises will not be funded by increased taxes or borrowing, according to the government. New charges levied upon immigrants will provide around £1 billion of the funding. For example, additional charges will be applied for visa applications and NHS access. Questions still remain over how the remainder will be paid for. 

7. BANK OF AMERICA FINED FOR OPENING CREDIT CARDS WITHOUT CONSENT

Bank of America has been slapped with $150 million in fines after it opened credit cards for customers without their permission. America’s second largest bank was also found to have  unduly withheld customer rewards and collected supposedly one-off fees multiple times from customers. The bank will refund customers over $80 million while roughly $70 million will be paid in fines. The Consumer Financial Protection Bureau (CFPB) found that Bank of America staff opened credit card accounts for customers without permission in order to meet sales targets. Furthermore, a one-off fee of $35 was charged for declined transactions due to insufficient funds. Customers were charged multiple times for the same transaction. Bank of America’s breaches took place as far back as 2012. It claims that remedial action has been taken. The bank has now removed account opening targets for credit card staff and insufficient funds fees for customers.

8. THAMES WATER SECURES NEW FUNDING

Thames Water has secured a £750 million cash injection from shareholders. The water company has been on the brink of collapse and is facing calls to be renationalized. Thames Water has a huge £14 billion debt pile and while it has cash to pay its bills for the next couple of years, there are huge issues needing addressing. The company has been embroiled in a scandal over the leaking of sewage into our rivers and waters. Former CEO Sarah Bentley even resigned after just two years at the helm due to the scandal. The £750 million in New funding will help bring greater stability. This follows Thames Water’s pre-tax loss of £82.6 million last year. 

The UK is the only country in the world with privatised water. Thames Water is owned by a range of investors. The largest shareholder is Canadian pension fund OMERS. Thames Water has not paid dividends to external shareholders for the past five years. It has, however, paid £200 million in dividends to internal group companies over the same period.

9. GATWICK AIRPORT SUMMER STRIKES

Gatwick Airport is facing eight days of strike action over the summer amid a dispute over pay. 950 staff including baggage handlers, ground staff and other airport workers will be striking. Strikes will take place from Friday 28 July to Tuesday 1 August, and then again from Friday 4 August to Tuesday 8 August. These workers are not Gatwick Airport employees but ARE employees of four other contracted companies. All staff are members of the Unite trade union. 

Last week, EasyJet also announced that it would be cancelling 1700 flights from Gatwick between July and September. This is due to constrained airspace in Europe and air traffic control issues. These issues are causing last-minute cancellations. Easyjet is pre-emptively reducing its scheduled flights to mitigate the impact of these problems. Almost all affected customers have been rebooked onto different flights. 

10. UK LEGAL TECHNOLOGY

The UK could be lagging behind in legal technology advancements, according to the recent data. Thomas Reuters found that of the 1184 patent applications for legal services technology in the year to September 2022, only one was filed in the UK. While patent applications are not the sole indicator technological advancement, it does evidence development of new or improved technology. The vast majority of global applications (755) were filed in China.  59 legal tech patent applications globally involved AI. Most lawyers now believe AI will help improve their efficiency.

We see these changes already taking place in the UK legal sector. Allen & Overy introduced a legal AI chatbot “Harvey” to help with contract drafting, analysis and even conducting due diligence. It is only a matter of time before such technology becomes more widespread.  

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