The week’s news included; Wilko officially closing despite deals with rivals, Shein sues Temu for alleged image theft, UK to ban single use vapes & nitrous oxide, Arm hits $68bn valuation in IPO.
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. – M&S turned it around and is now in FTSE 100. Here’s why John Lewis is so far off
- Legal Cheek – Meet the City lawyer helping clients navigate risk.
- BBC News – ‘Overwhelming consensus’ on AI regulation – Musk
- City A.M. – If banks are so committed to net zero, why are they pumping trillions into fossil fuels?
1. GOOGLE IN CRUCIAL ANTITRUST BATTLE
Another week, another antitrust battle for Google. The tech giant begins its defence in a crucial court case over anti competitive behaviour in California. Government lawyers allege that Google maintains its market position by anticompetitive and abuse practices. The tech giant pays billions of dollars to retain its place as the default search engine both on mobile devices and PCs. It also bundles its search engine with Android software sold to phone makers, giving it an unfair advantage over competitors. Google holds roughly 90% of the internet search engine market. The tech giant denies any wrongdoing.
Top executives at Google and its parent company Alphabet will now give evidence in court. The outcome of this case could have huge implications for Google and the wider big tech space. A judgement is expected by early 2024.
2. WILKO COLLAPSE CONFIRMED
Most of Wilko’s 400 stores will close after administrators failed to find a buyer for the whole business. Doug Putman’s Sunrise Records was in the running to buy most of Wilko’s stores, but this deal collapsed due to funding issues. Last week, Poundland agreed to take over the leases of 71 Wilko stores. The discount retailer will rebrand the outlets and it will give priority to former Wilko staff. Rival B&M agreed to buy 51 Wilko stores but these outlets will be rebranded. No announcements have been made on whether Wilko staff will be retained. Over 3200 staff at stores included in the Poundland and B&M now wait to see their fate.
Another rival retailer, The Range, has also agreed to buy Wilko’s intellectual property and website for £5 million. Only Wilko’s digital trading team of 36 staff will be saved by this deal and some Wilko products may still continue to be sold.
52 stores had already been earmarked for closure by the end of September but the remainder of stores will also now face closure. This marks the end of a 93 year presence of Wilko on our high streets.
3. SHEIN SUES TEMU OVER THEFT
Shein has sued Temu accusing them of stealing images from its website. Temu sellers had allegedly taken photos from Shein without permission to market their own products. Shein has filed a lawsuit in London, seeking an injunction against Temu sellers. The fashion giant wants the sellers to take down the images. They are also seeking £100,000 in damages.
Earlier this year, Temu had sued Shein for allegedly bullying suppliers with restrictive contracts to prevent them from supplying Temu . Shein is also facing a racketeering lawsuit from independent designers for egregious theft of their designs (see previous top 10).
4. PATISSERIE VALERIE EXECS ARRESTED
The Serious Fraud Office (SFO) has charged and arrested four individuals in relation to the collapse of bakery chain Patisserie Valerie. Patisserie Valerie collapsed in 2019 after a £10 million black hole was found in their books. The chain had been given a clean bill of health by auditors and the SFO claims executives artificially inflated the company’s balance sheet. The former director & CFO, his wife, the company’s financial controller and financial consultant have all been arrested and will appear in court next month. Auditor Grant Thornton was already fined £2.3 million over its failings. 900 staff members lost their jobs when Patisserie Valerie collapsed.
5. UK TO BAN SINGLE-USE VAPES
The government is soon to ban single-use vapes due to environmental and child welfare concerns. Over 5 million vapes are thrown away every week and create a huge plastic and battery waste issue. Vapes or e-cigarettes typically contain lithium ion batteries.
Vape makers and retailers have also been criticised for selling products in child friendly packaging. This has led to a surge in the use of vapes by under 18s. Vapes contain nicotine but they come in a range of flavours that particularly appeal to young people. Other countries have already taken action to clamp down on vape use. Australia, Germany, New Zealand and even the US have taken action to restrict the sale of vapes, particularly with regards to its marketing to children.
Last week, MPs also approved a bill to make nitrous oxide a class C drug. Unlawful possession of laughing gas canisters will now carry a fine or 2 year prison sentence. Unlawful supply will carry a 14 year sentence. The use of nitrous oxide for commercial purposes such as cooking or for medical reasons will still be permitted. Intense use of laughing gas can cause nerve damage and paralysis.
6. ARM LISTING
UK based tech firm Arm Holdings listed its shares on the NASDAQ stock exchange and it was a hit. Shares in Arm soared by nearly 25% on the first day of trading, reaching $63.59. Arm’s owner, SoftBank, listed 10% of the shares and now retains 90% of the company. SoftBank bought Arm in 2016. Arm is now worth $68 billion and this IPO marks the largest US listing since 2021.
This listing is a blow for UK markets as Arm snubbed a London listing in favour of the US. The company blamed Brexit and a poor economic outlook for its decision. Arm is often dubbed the crown jewel of British tech and it produces chips and processors that are used in a vast array of tech.
7. TWINKIE MAKER BOUGHT FOR $5.6BN
The maker of American snack Twinkies, Hostess Brands, has been bought by JM Smucker for $5.6 billion. JM Smucker is a US based giant worth roughly $14 billion and makes Jif peanut butter and preservatives. The company beat other giants like Oreo maker Mondelez and Cheerio maker General Mills to the purchase. Hostess Brands currently has 3000 staff and is listed on NASDAQ. The company has, however, had its fair share of financial difficulty. Hostess filed for bankruptcy in 2012 and was rescued by Apollo Global Management and Metropoulos in 2013. This deal marks the largest takeover in the food manufacturing sector of 2023.
8. TIKTOK LAUNCHES E-COMMERCE PLATFORM
TikTok has launched its e-commerce business in the US. Users will now be able to do shopping on the platform. A new “Shop” tab will be introduced and content creators will be able to sell products through the app. Videos and live streams with links to products on the marketplace can now be made. TikTok has 150 million US users and hopes to fully monetise its user base. Like other market places, sellers will have analytics and logistics tools within the app. The social media giant has been trialling the platform since November 2022.
Last week, TikTok was also slapped with a €345m fine in Ireland for violating children’s privacy. The platform allegedly mishandled children’s data in 2020 with regards to privacy and age verification. The fine was issued under GDPR. BBC News looks closer at the case.
9. ECB RAISES INTEREST RATES TO RECORD HIGH
The European Central Bank has raised interest rates to a record high of 4%. This marks the 10th consecutive meeting in which rates have been raised. Like the English and US central banks, the ECB is attempting to stem rising inflation by raising interest rates. Eurozone inflation rates currently sit at 5.3%. There is some relief for borrowers as the ECB has signalled that this is likely to be the last rate hike for some time. Inflation is expected to decrease in 2024 and crucially, decrease to a rate close to its target of 2%. 20 of the 27 EU member countries are currently part of the Eurozone.
10. ELECTRIC VEHICLE UPTAKE
Electric vehicles (EVs) are failing to gain traction despite the impending ban on new petrol and diesel vehicles. From 2030 automakers will be banned from selling petrol and diesel vehicles. EVs are still, however, prohibitively expensive. They cost over 37% more than combustion engine vehicles on average. There are now calls to introduce great incentives to encourage drivers to switch to EVs. Only about 3% of UK motorists drive an electric vehicle.
EV leasing company Onto has fallen into administration last week after losing a key backer. Onto had a fleet of 7000 EVs and 20000 subscribers. Subscribers could sign up to no deposit monthly rolling contracts to lease an EV with public charging, insurance, tax and breakdown cover included. Onto had secured £22.5 million earlier this year from Legal & General (L&G) as part of $350 million in total funding. L&G confirmed they would not put up any more cash and now Onto have run out of funds. Uptake of EVs wasn’t as fast as required yet the costs of running the service were immense. This shows the current difficulty in achieving widespread EV adoption.