The week’s news included; Apple facing £1bn lawsuit over app store fees, Litigation funding deals ruled unenforceable, Natwest CEO resigns over Farage debacle, Saudi bankrolls £4bn Selfridges 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. – Weird Barbie should provide some unlikely inspiration for the Bank of England
- BBC News – Is Elon Musk right to ditch the Twitter bird logo?
- City A.M. – Explainer: Why are plane tickets so expensive?
- BBC News – Why is technology not making us more productive?
- The Law Gazette – The Solicitors Qualifying Examination has disrupted the training market – but confused it, too.
1. APPLE FACING £1BN LAWSUIT
App developers are suing Apple for £1 billion as they allege the tech giant is overcharging them. A group action lawsuit on behalf of 1566 app developers is being launched against Apple’s 15% – 30% commission charged on in-app sales. Sean Ennis, a professor at the University of East Anglia Centre for Competition Policy is bringing the action against Apple. He claims the charges are excessive and are the result of Apple’s monopoly of iPhone and iPad apps. Apple’s services business, which includes Apple Pay, Apple Arcade and the App Store, turns over $80 billion every year.
The tech giant was already pressured into lowering its fees after developer complaints. In 2020, developers who generated less than $1 million saw their fees drop from 30% to 15%. Ellis does not believe this goes far enough and believes the current commission charges “constitute abusive pricing”.
Apple already lost its battle against Epic Games over a similar issue. Here, a US federal court ruled that Apple’s prohibition on app developers offering alternative in-app payment systems was anticompetitive. Now, developers can bypass Apple’s 30% commission by linking users to alternative payment systems.
2. SUPREME COURT RULES LITIGATION FINANCING DEALS UNENFORCEABLE
The Supreme Court has ruled that most litigation funding deals are unenforceable. A court case examined whether litigation funding deals fall under the statutory definition of damage based agreements (DBAs). The Supreme Court ruled that litigation funding deals do constitute DBAs and therefore must meet relevant criteria in order to be enforceable. In the case heard by the court, the financing agreement in question did not satisfy the required criteria to be a DBA and therefore, was not enforceable. This decision contrasts the industry understanding that litigation financing deals were not DBAs and marks a significant change.
Litigation financers bankroll lawsuits in return for an agreed percentage of the winnings. This enables individuals and smaller entities to take on financially superior adversaries in court.
While this ruling does not prohibit litigation funding agreements, it does now bring about stricter requirements for litigation funding deals. Litigation financers will be required to amend the structures and terms of their agreements going forward.
For the full judgement of the case, PACCAR Inc & Ors v Competition Appeal Tribunal & Ors, click here .
3. MUSK REBRANDS TWITTER
Elon Musk has rebranded Twitter, naming the app “X”. Twitter’s iconic blue bird logo has been dropped in favour a white letter X on a black background. Tweets are now called “x’s” according to Elon Musk. The new business name of Twitter is now “X Corp”.
This appears to be phase one of Musk’s plans to create an “everything” app. Inspired by the use of WeChat in China, Musk hopes that X will be used for more than just social media. This can include payments, shopping and or more. Currently within WeChat, users can send messages, share photos, and even send/receive money. There is scepticism however, over whether users will be willing to hand over their data to X. Furthermore, regulators could prevent X from entering the payments field.
X faces an array of other legal challenges. The letter X is present in over 900 US trademarks across a variety of industries. For example, Microsoft owns a trademark covering the letter X in relation to gaming, covering its Xbox video game console. Meta even holds a trademark for the letter “X” in the social network, app development and entertainment space. Musk’s rebrand will inevitably result in legal challenges. Companies will argue the use of the letter X in X Corps’ products, marketing and communications infringes upon their own trademarks. How Musk will fend off these claims remains to be seen.
4. NATWEST CEO RESIGNS AMID FARAGE DISPUTE
Dame Alison Rose, CEO of Natwest, has resigned over her leaking of inaccurate information to the BBC regarding Coutts’ decision to close former UKIP leader Nigel Farage’s bank account. Dame Rose gave the impression to the BBC that Coutts closed Farage’s account due to his failure to meet the minimum wealth thresholds. Farage later obtained a report detailing that his account was closed because of reputation concerns due to his political views and affiliations. The report mentioned that Farage was “xenophobic and racist”, and considered the reputational risk of having Mr Farage as a client. Rose said she made a “general comment about financial eligibility” to the BBC but did not clarify the true reason for the closure. In disclosing information to the BBC however, she had breached confidentiality rules.
Dame Rose faced political pressure from the Prime Minister and government to step down once the facts had emerged. She will now also step down from her roles on the government’s net zero council, energy efficiency taskforce, and the Prime Minister’s business council. The CEO of Coutts, Peter Flavel, has also resigned over the issue. Natwest is still 39% owned by the taxpayer. Coutts is a subsidiary of Natwest.
Dame Rose had been the darling of the City up until this point. In 2019, she became the first female leader of a major British bank when she took up the role of CEO. Since then, she has turned around the beleaguered RBS, rebranded it to Natwest and oversaw a return to profitability. RBS received a £45 billion government bailout in 2008 and has been partly government owned ever since.
5. ULEZ GETS COURT GREENLIGHT
The High Court has struck down a legal challenge against the expansion of the London ultra low emission zone (Ulez). Under the plans, the whole of Greater London will be caught by Ulez and high pollution vehicles will face a £12.50 daily charge to enter the region. Currently, only areas between the North and South circular are within Ulez. London Mayor Sadiq Khan says the move is crucial to improve London’s air. Critics however, argue that many people can’t afford newer, cleaner vehicles but the daily charge is also unviable, particularly for those who travel in for work. London boroughs of Bexley, Bromley, Harrow and Hillingdon, along with Surrey county council launched legal action against the proposals. The court found the expansion of Ulez was lawful and within the Mayor’s powers. The London boroughs who challenged the expansion said they will not appeal the decision. The expansion of Ulez will come into effect from 29 August.
6. SAUDI PIF BEHIND SELFRIDGES TAKEOVER
Saudi Arabia has been revealed as the financer behind the £4 billion acquisition of Selfridges. Austrian property firm Signa Holdings partnered with Thai firm Central Group to buy a 50% stake each in the luxury retailer. Saudi Arabia’s Public Investment Fund (PIF) was the financial backer behind the fund of Signa Holdings that was involved in the deal. The identity of the financial backer was private and unknown until now.
Saudi is quietly but swiftly cementing its holdings in key entertainment and luxury brands. In 2021, Saudi took over Newcastle and it recently became Aston Martin’s second largest shareholder. Over this summer transfer period alone, Saudi’s football clubs have spent over £200 million on players. They have also made a world record bid for PSG superstar Kylian Mbappe at £259 million. Mbappe would receive a whopping £600 million salary for one season under the deal but he has rejected this. The sovereign wealth fund has committed $2.3 billion to investment in football to help diversify its economy.
7. BRITISH GAS POSTS RECORD PROFITS
British Gas has posted a record £969 million profit for the first 6 months of 2023, up over 900%. These figures have sparked outrage as households suffered extortionate increases in their energy bills and the government had to step in to prevent prices rising too high. The government capped the average household energy bill at £2500 between October and June. By comparison, British Gas posted a £98 million profit in the same period last year. Energy regulator, Ofgem, noted that these profits were a one-off due to the rise in the energy price cap. Roughly £500 million of the increased profits were due to the price cap hike. Scottish Power and EDF both. Along with causing fuel poverty, rising energy costs have contributed to spiralling inflation. Many are criticising this as profiteering at the expense of customers and the wider economy.
8. NETFLIX POSTS AI JOBS
Netflix is seemingly looking to bring in more AI amid a screenwriters strike in Hollywood. with AI technology. Writers and some actors in Hollywood have been on strike for nearly 3 months bringing new productions to a halt. Last week, Netflix unveiled new AI and Machine Learning expert roles paying up to $900,000. One of these roles is for a project manager and will see the individual use AI tools to collect user feedback and help with investment decisions. There is concern that the new hires could help create AI bots to generate content for movies and TV series.
One of the main complaints of writers is that AI and algorithms have too much power. Insiders claim many decisions around content such as the number of series and episodes per series are all determined by what algorithms suggest would generate the best feedback. Netflix are adding more fuel to the fire with these potential new hires. The Writers Guild has suggested new industry rules to restrict the use of AI in the creative writing process. The strikes have also been driven by disputes over pay. Both actors and screenwriters are seeking more equitable shares from movies and TV series revenue.
9. TOTTENHAM HOTSPUR OWNER INDICTED
Billionaire owner of Tottenham Hotspur Football Club, Joe Lewis, has been arrested for insider trading. Insider trading is acting on or encouraging others to act upon sensitive non-public information relating to financial instruments. Lewis is a senior board member and would regularly receive inside information on companies. This information could include reports of strong profits, merger and acquisition news or changes to senior management for example. Between 2019 and 2021, He would share this information with his friends, romantic partners and close staff members (associates). These associates would then trade on the stock market based on this information. They were almost guaranteed to make profits based on the information provided and they ended up making millions from these trades.
The 86-year old Joe Lewis is being charged with 16 counts of securities fraud and three counts of conspiracy. He faces up to 25 years in prison. Lewis voluntarily turned himself in to US authorities. He confirmed through his lawyers that he will fight the case in court.
10. AMAZON CLOSES UK AMAZON FRESH STORES
Amazon has closed three of its checkout-free stores in the UK, just two years after opening. The retail giant opened its first UK till-less store in March 2021 in Ealing Broadway in London. It was hailed as a new revolution in grocery shopping as the store had no tills. Customers would simply pick up items they want and walk out. Their Amazon accounts would then be charged as cameras and sensors identified what they picked up. Last weekend, Amazon Fresh in Wandsworth and East Sheen were also closed. The decision to close the branches followed an assessment of the performance of its stores. Amazon is, however, planning to open new outlets in Greater London.