The week’s news included; Apple could remove Facetime and iMessage in UK over new law, Shein sued by Temu over supplier bullying, FCA clampdown on “Finfluencers”.
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 competition watchdog is plagued with a knee-jerk belief that ‘big is bad’
- CNBC – Barbie is all the buzz this summer — and retailers hope it will make cautious consumers spend
- BBC News – AI will ‘lead to more games being made and more jobs’
- City A.M. – Analysis: A crackdown on university degrees
- Legal Cheek – Two years on: 5 reflections on the Solicitors Qualifying Exam (SQE).
1. APPLE COULD REMOVE FACETIME & IMESSAGE IN THE UK
Apple has said it will remove Facetime, iMessage and similar services in the UK if the government’s Investigatory Powers Act comes into force. Under current plans, messaging service providers must receive Home Office clearance on updates to their service before public release. This process could require operators to disable security features. It could even require operators to create “backdoor” access to encrypted user messages. Apple has staunchly opposed the new law and has said it would not make any changes that weaken data security. An eight week consultation period is underway.
The UK government has received much pushback on its new data laws. Messaging apps Signal and WhatsApp have said they will pull their services from the UK if elements of the Online Safety Bill go through (see previous top 10). The government made amendments to the Online Safety Bill requiring a “skilled person” to write a report for communications regulator Ofcom before firms are obligated to scan messages. Critics argue that a “skilled person” could be a political appointee so genuine judicial oversight is missing. Also technical questions remain over its viability so whether these amendments will gain wider support remains to be seen.
2. SHEIN SUED BY TEMU
Shein has found itself in the legal firing line again as Temu takes legal action against the fashion retailer. Chinese Competitor online retailer Temu claims Shein is bullying suppliers into not working with them. This is allegedly down via loyalty oaths with suppliers that explicitly mention Temu. Temu claims this breaches US antitrust law and harms consumer choice. Shein has said it will defend itself, claiming the allegations are “without merit”.
Two weeks ago, lawsuits were launched against Shein over allegations of “egregious” copyright infringements and racketeering (see previous top 10). Shein’s legal team will no doubt be busy over the coming months.
3. TOUGHER BANKING RULES FOLLOWING FARAGE – COUTTS DISPUTE
UK banks could face extra conditions to retain their licences amid a dispute over the closure of Nigel Farage’s account at Coutts. Farage claims his account at the private bank was closed due to his political views. He obtained an internal suitability report which cited “political and reputational risk” as the reason for the closure. The report specifically referred to Brexit and Farage’s links to Russia. Coutts however, claims that Farage failed to meet the minimum wealth thresholds. Coutts requires account holders to hold at least £1 million in investments or borrowing, or at least £3 million in savings. When individuals fall beneath the thresholds, the bank reviews their account, considering other risk factors. Instead of the account at Coutts, Farage has been offered a different account at Natwest. Natwest CEO, Alison Rose has however, apologised for the comments made in Farage’s suitability assessment. Coutts is owned by Natwest.
The government has waded into the dispute, claiming Coutt’s decision was unacceptable. Now, ministers are considering stripping the licences of banks who fail to uphold consumers’ rights to free speech. Proposals have also been suggested to force banks to explain the reason for account closures and give customers longer notice periods. The UK financial regulator has also contacted Coutts regarding the matter. Natwest has now received hundreds of personal data requests from customers curious about what information the bank holds on them.
4. FCA CLAMPDOWN ON FINFLUENCERS
The Financial Conduct Authority (FCA) is clamping down on “finfluencers” and potentially misleading or fraudulent ads on social media. New social media guidance will be released to keep up with the changing ways in which people promote financial services and consumers obtain financial information. Cryptocurrency firms will be banned from offering refer a friend incentives. Buy-now-pay-later firms will also face stricter rules. Financial influencers or “finfluencers” are also in the crosshairs and can expect closer monitoring from the regulator. Those who promote get rich quick schemes will be caught by the new guidelines. The FCA claims that 58% of investors under 40 who invested in high-risk investment products were influenced by hype on social media.
5. UK INFLATION DECREASE
Inflation is on the way down in the UK and is falling faster than expected. Prices grew by 7.9% last month compared to the same time last year. This was 0.3% lower than markets anticipated. For the first time in 3 years, supermarkets are lowering prices and this is contributing to falling inflation. Compared to last year however, food prices are up by 17.3%. Core inflation, which excludes food prices is still high at 6.9%. The Bank of England will be closely watching these figures to determine their next move on interest rates. Inflation still sits way above the Bank’s target inflation rate of 2% and raising interest rates is its main lever against inflation. Analysts are predicting another 0.5% increase, taking rates up to 5.5%.
6. NETFLIX PASSWORD SHARING CRACKDOWN PAYS OFF
Netflix’s plans to crackdown on password sharing has paid off. The streaming giant gained 5.9 million subscribers in Q2. New rules mean that Netflix accounts can only be used by those within the same household. An additional £5 a month would need to be paid to share the account with those outside the household. This was rolled out across 100 countries. Netflix expects a similar number of new subscribers next quarter too. Many analysts predicted users might cancel their subscriptions but the cancel rate in Q2 was very low. While this provides a welcome boost for Netflix this quarter, longer term strategies to boost subscriber numbers need to be identified.
7. CMA INVESTIGATION CLEARS GROCERS
The UK Competition and Markets Authority has found the supermarkets are not responsible for pushing up food inflation, despite allegations of profiteering. Food prices have soared by 17.3% in the year to June 2023. An investigation by the regulator identified that across the retail grocery sector, profits sank by 41.5% in 2022/23, meaning rising wholesale costs had not fully been passed onto consumers. It had previously transpired that major supermarkets paid out £700 million in dividends to shareholders and this sparked government claims that they exacerbated the cost of living crisis in order to pay shareholders. Supermarket bosses defended themselves last month and argued that profits had not risen and the market remained competitive. The CMA agreed that the sector was not profiteering but did suggest more stringent rules on unit pricing to help with price comparison.
8. TWITTER REVENUE SINKS
Twitter’s advertising revenue has crashed by 40% since Elon Musk’s takeover in October 2022. The social media company is on track to post just $3 billion in revenue, down from $5.1 billion two years prior. Many advertisers objected to Musk’s plans to remove many moderation guidelines. These were removed to bring back freedom of speech on the app, according to Musk. This however, resulted in an exodus of advertisers. Twitter still sits on a huge multi-billion dollar debt pile. Around half of Twitter’s 7500 staff were cut upon Musk’s takeover, saving millions in costs. The weak revenue figures however, wipe out any savings. Musk may have to sell more Tesla shares to service Twitter’s debt.
9. MCDONALDS HARASSMENT CULTURE
McDonald’s has come under fire as an investigation found that labour laws regarding harassment and sexual assault are being routinely broken. Workers at over 100 franchises have spoken out that a culture of sexual assault, racism and harassment is pervasive at the fast food chain. MPs are now calling on the chain to terminate agreements with any offending franchises. McDonald’s has 1450 UK restaurants and employs 170,000 people in the UK. The chain said it had “fallen short” with regards to the failures .
10. TATA TO BUILD UK BATTERY FACTORY
Tata, the owner of Jaguar Land Rover is building a new battery factory in the UK. The UK government agreed to provide huge subsidies to lure the conglomerate to the UK. This is considered one of the largest investments in the automotive industry in decades. Now, more batteries for electric and hybrid vehicles can be produced in the UK. The new factory will be built in Somerset and is expected to create 4000 new jobs. Tata will be investing £4 billion into the plant.
