The week’s news included; WeWork files for bankruptcy, Airbnb facing €779.5m tax seizure, Allen & Overy suffers cyber attack, Shell sues Greenpeace for £1.7m.
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:
- BBC News – Can AI cut humans out of contract negotiations?
- City A.M. – Too big to succeed: the corporate blob is killing businesses
- BBC News – Whatever happened to NFTs?
- City A.M. – Why sponsorship at the 2023 Rugby World Cup offered hope for a troubled sport
1. WEWORK FILES FOR BANKRUPTCY
WeWork has filed for bankruptcy protection in the US as it looks to restructure its debt. The office rental company was worth a huge $47 billion at its peak barely five years ago. Plans for an IPO were derailed in 2019 due to severe concerns about the company’s structure. This left WeWork in a financial hole it hasn’t been able to get out of. Founder and ex-CEO Adam Neuman was pushed out of the company with a $1.5 billion exit package after the debacle, but WeWork continued making losses. WeWork is now valued at just $50 million. It has $2.9 billion in long term debts and $13 billion in leases. WeWork filed for Chapter 11 bankruptcy protection, allowing it to restructure its business and debts. Its office sharing spaces will remain open for now.
2. EPIC GAMES BEGINS GOOGLE LEGAL BATTLE
Epic Games has launched its court battle against Google over its commission on in-app purchases. Google’s Play store takes a 30% cut of each in-app purchase and restricts the distribution of Android apps outside of its own store through “contractual and technical barriers.” Epic claims that this constitutes a monopoly. Google argued that users have many other ways to download apps. The pair are now locked in a legal battle in San Francisco.
This case mirrors Epic’s battle against Apple which concluded in 2021. In this case, the court did not deem Apple to be a monopoly but affirmed that app developers must be permitted to offer users in-app purchases outside of Apple’s App Store, thus avoiding charges.
3. AIRBNB FACING €779.5M SEIZURE
Italian prosecutors could seize a huge €779.5 million from Airbnb as part of a tax evasion lawsuit. The property rental site allegedly failed to pay enough tax. Airbnb should have paid 21% of Italian landlords’ rental income in tax but failed to do so between 2017 and 2021. This requirement was imposed in 2017 under an ECJ ruling which Airbnb unsuccessfully appealed. Last week, judges in Italy authorised the seizure of the unpaid tax. The seizure will put a dampener on Airbnb’s recent financial success. Airbnb posted record profits last quarter.
4. EU COULD REVERSE €13BN APPLE TAX RULING
Apple could see its victory against the EU regarding a €13 billion tax bill reversed. A senior advisor to the European Court of Justice found that the EU tribunal made mistakes in its ruling and recommended that the case should be reviewed. The case was about Apple’s receipt of tax benefits in Ireland that constituted unfair state aid. In 2014, Apple’s tax rate was just 0.005% following two tax rulings in Ireland. The EU ruled in 2016 that Apple should pay €13 billion in back taxes but this was overturned in 2020 upon Apple’s challenge. The ECJ’s advocate general however, has recommended that the case be referred back to the tribunal. This is because the General Court failed “to assess correctly the substance and consequences of certain methodological errors” made with regards to the law. Although advocate general opinions are non-binding, they are often followed. This could prove a significant setback for Apple in this case.
5. ACTORS STRIKE DEAL AGREED
The actors’ strike in the US could be coming to an end. Sag-Aftra, the union representing US actors, has struck a tentative deal with Hollywood studios bringing a potential end to the industrial action. Actors have been striking for four months bringing much of Hollywood to a standstill. The state of California has lost $6.5 billion as a result of the strikes. Actors have been striking due to pay issues. Actors’ pay structures have not adapted to fairly compensate them in light of the growth of streaming services. There are also concerns about the use of AI. The deal, tentatively agreed between Sag-Aftra and the Alliance of Motion Picture and TV Producers (AMPTP), is worth a reported $1 billion. It will see new streaming participation bonuses, increased minimum salaries and protections against actors’ voice and likeness being replicated by AI. Sag-Afra has roughly 160,000 members.
6. SHELL SUES GREENPEACE FOR £1.7M
Oil and gas giant Shell is suing environmental activist group Greenpeace for £1.7 million. Greenpeace occupied one of Shell’s ships in January. The ship was transporting an oil platform to the North Sea. Greenpeace used inflatable boats to approach the ship, boarded it using ropes and remained there for 13 days. The group are fighting against new fossil fuel and oil drilling. Shell is now seeking £1.7 million in damages to cover costs of responding to the protest. They agreed to reduce the amount to £1.14 million if Greenpeace agree not to protest at any of their infrastructure on land or sea. Greenpeace said however that they would agree to this if Shell adhered to a Dutch court order to reduce emissions by 45% by 2030.
7. ALLEN & OVERY CYBER ATTACK
Magic Circle law firm Allen & Overy has been hit by a cyber attack from criminal gang Lockbit. A “small number” of servers had faced some disruption due to the attack but continue to operate as normal. Lockbit gave Allen & Overy until November 28 to negotiate with them. The firm is still assessing what data has been affected. Affected clients are also being contacted. Lockbit has already been internationally designated as one of the largest cybersecurity threats. Royal Mail and Boeing had already been hit by Lockbit earlier this year. Law firms are increasingly being targeted by cyber criminals to steal crucial data and evidence used in ongoing lawsuits. This shows the importance of robust IT security for law firms and the potential harm to litigation processes that can arise from cyber attacks. Allen & Overy agreed to merge with US firm Shearman & Sterling earlier this year.
8. ICO APOLOGISES TO ALISON ROSE
Former Natwest CEO, Dame Alison Rose, has received an apology from the Information Commissioner’s Office. The data protection regulator claimed she had breached data protection laws by disclosing reasons for the closure of Nigel Farage’s Coutts account. The Information Commissioner’s Office is investigating the disclosure but the investigation is into Natwest as an organisation not Dame Alison Rose individually. Consequently, their comments gave the wrong impression that they had investigated Alison Rose’s actions and that she had breached privacy rules, which they had not.
Last week, Natwest also cleared Dame Alison Rose of misconduct with regards to this issue. However, she will lose out on bonuses and some pay for 2023 worth £7.5 million. Check out our previous top 10 for more on the debacle.
9. UK ECONOMY AVOIDS RECESSION
The UK economy posted no growth in Q3 of 2023. While this is not encouraging, it does mean the UK has avoided falling into recession. There was very limited growth or decline in most sectors. The UK’s construction industry grew by 0.1%, production did not grow or shrink while services fell by 0.1%. Rising interest rates and cost of living led to overall growth becoming stagnant. Interest rates remain steady at 5.25% as inflation is falling from its recent highs. Despite this, inflation remains well above the 2% target rate so we are unlikely to see low interest rates for some time.
10. OMEGLE TO CLOSE
Video chatting website Omegle is closing down due to numerous cases of abuse. Omegle randomly puts users in video chats with strangers. Users can move on to another randomly selected user at any time. The platform was very popular with young people and boasted 73 million users a month. The random pairing of users however, meant sexual harassment and abuse was rife. Furthermore, there was reportedly no human moderation. Omegle has already been hit with a lawsuit brought by a minor who was paired with a paedophile. The case is currently ongoing. Over 50 legal cases involving paedophiles have mentioned Omegle. Founder Leif Brooks said that Omgele was “no longer sustainable, financially nor psychologically” due to the widespread misuse of the website to commit abuses.