There will be no top 10 next week.

The week’s news included; US government approves TikTok ban, FTC bans employee non-compete clauses, Tapestry’s $8.5bn takeover of Versace owner Capri facing competiton probe.

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. – Is there enough student housing for the next cohort of school leavers in September?
  • BBC News – How robots are taking over warehouse work
  • City A.M. – Why stepping aside was the best business decision for Vinted’s founders

1. US GOVERNMENT BANS TIKTOK 

The US TikTok “ban or divest” bill has passed through Congress. TikTok must now divest its US business to a US company within nine months or it will be banned in the US. TikTok has over 100 million US users and is one of the most popular in the US. The US government alleges however, that TikTok may be sharing data with the Chinese government. TikTok has always denied the allegations. TikTok owner ByteDance has said it will challenge the motion in court. If it fails in court, ByteDance has said it would rather shut down TikTok in the US than sell it to a US company. Even so, there are very few US companies capable of buying TikTok. TikTok is worth tens of billions of dollars.

Any legal action against the ban however, could take years to make its way through the courts. Furthermore, a US Federal judge in Montana already blocked the state’s attempt to ban TikTok so there is a tough legal battle ahead for the US government. There are 1.5 million US businesses on TikTok who would significantly lose out if the ban is successful.

2. FTC BANS NON-COMPETE CLAUSES

The US Federal Trade Commission (FTC) has voted to ban non-compete clauses in employment contracts. This means employers can no longer prevent their employees from moving to competitors. In some industries, employees are contractually prevented from joining rivals or setting up their own businesses for up to 2 years after leaving a company. The FTC said these clauses are no longer enforceable and this will ensure workers have more freedom to seek new opportunities. Although employees can still be bound by confidentiality agreements, this marks a huge blow for employers who claim these clauses help prevent rivals taking strategies or trade secrets. Employers can also use non-solicitation agreements so leavers cannot poach clients or other employees.

Non-compete clauses are common in the tech and financial services sectors. These changes are likely to be introduced in August 2024 and will apply across the US. After this, no non-compete clauses are enforceable although existing agreements with senior executives can remain in place. 

3. AMAZON AND MICROSOFT AI DEALS INVESTIGATED

Amazon and Microsoft are being investigated by the UK Competition and Markets Authority over recent artificial intelligence deals. There is a concern that the pair could be stifling competition in the budding AI space. Microsoft recently agreed a partnership with Mistral AI and hired key staff from Inflection AI. Amazon recently invested a huge $4 billion in Anthropic (see previous top 10). The CMA is now investigating the move to ensure the pair aren’t breaching competition law. “Interested third parties” are being invited for comment. The CMA are examining whether the nature of these recent deals would fall into scope of the UK’s merger rules. If so, there may be cause to investigate further their potential impact on competition. Both firms claim they are compliant with competition rules, given the nature of these agreements.  

4. FTC MOVES TO BLOCK TAPESTRY & CAPRI 

The US Federal Trade Commission (FTC) has launched legal action to block Tapestry’s $8.5 billion takeover of Capri. Tapestry is a fashion conglomerate with brands like Coach and Kate Spade under its umbrella. Capri has Versace, Jimmy Choo and Michael Kors. The FTC believes the deal would harm competition as the pair are close rivals in the luxury fashion space. Crucially, they argue workers would lose out on benefits and higher wages due to this reduced competition. The combined group would employ 33,000 staff and gain a dominant market share. It would compete with the largest fashion houses including LVMH, Hermes and Chanel. 

Both Capri and Tapestry strongly rejected the assertions by the FTC. They argue that competition will not be reduced given the fragmented luxury fashion industry. The deal has a completion deadline of 10 August.

5. GOOGLE FACES SEARCH ENGINE COMPLAINT 

Google has been hit with a EU complaint that it is abusing its market dominance. Rival email service, Tuta Mail, claims Google has restricted its appearance on its search engine. Tuta Mail offers encrypted emails and has ten million users. Tuta says that searches for “encrypted email” have been made less accessible since March. This has resulted in a 90% drop in website traffic, according to Tuta. Google rejects the allegations and says searches for Tuta are readily accessible on its search engine. While there was an update to its search engine algorithm in March, it rejects the allegation that it favours its own Gmail service over competitors. It also noted that for some search terms Tuta does appear above Gmail. Tuta has nonetheless filed a complaint at the EU. 

6. CMA WINS JUDICIAL REVIEW

The Competition and Markets Authority (CMA) has won a legal challenge against the Competition Appeal Tribunal (CAT) over search warrants. The CAT refused to grant the CMA a search warrant as part of the CMA’s investigation. Last year, the CMA launched an investigation into anti-competitive activity in the supplies of chemicals in the construction industry. The CMA sought warrants to search three business properties and one domestic property. The CAT refused to grant a warrant for the domestic property but the CMA launched a judicial review against this refusal. It was argued that the CAT’s decision could limit the CMA’s ability to effectively investigate cartels. Last week, the High Court ruled in favour of the CMA. 

7. ANGLO AMERICAN REJECTS BHP DEAL

Mining giant Anglo American has rejected a £31.1 billion takeover from competitor BHP. The deal would have created the world’s largest copper mining company. Copper is a crucial metal used to conduct electricity and is high in demand as the world shifts towards electric vehicles. The deal would however, have faced substantial regulatory challenges given the close competition between the two. Anglo American owns two copper mines, in Chile and Peru where BHP also has some operations. 

Under the proposed BHP deal, Anglo American would have to restructure its business. Furthermore, this could limit its copper production growth in a time where demand is on the rise. BHP is one of the largest private miners in the world with revenue of over $60 billion. 

8. GRINDR SUED OVER DATA SHARING

LGBT dating app Grindr has been sued for allegedly sharing personal information such as HIV status with third parties. Grindr allegedly tracked and shared sensitive data of thousands of UK users with advertisers. Grindr firmly denies the allegations and claims its a “mischaracterization of practices”. If the allegations are true, affected users could receive thousands of pounds in compensation. Although the company admits to sharing data with advertisers prior to April 2018, it claims since GDPR it had since stopped sharing personal data. The app has nearly 1 million UK users. 

9. TELEGRAPH TO REOPEN AUCTION 

The Telegraph Group is reopening the auction for its business after the Abu Dhabi backed investment fund is pulling its bid. Redbird IMI is looking to withdraw its £600 million bid for the media group after the government introduced new rules to prevent newspaper takeovers by foreign states (see previous top 10). This measure was introduced in direct response to Redbird IMI’s offer. Redbird IMI’s withdrawal will trigger another auction. Redbird IMI is now exploring joint ventures with other players in the industry such as Daily Mail General Trust (DMGT). Rupert Murdoch’s News UK is also exploring bids. 

10. SPOTIFY POSTS RECORD PROFIT

Spotify has posted record reports of over €1bn (£860m). The streaming giant also saw quarterly revenue increase by 20% to €3.64bn. Spotify has ploughed billions with podcasters to boost its user numbers. Over $100 million was spent on the Joe Rogan experience, while $25 million was spent on the deal with Harry and Meghan. The company also slashed 1500 jobs last year in order to become more profitable. Premium subscriber users jumped by 14% in Q1 and total user numbers hit 615 million. This fell 3 million short of its own estimates. Spotify was founded in 2006 and is worth $57 billion. The company aims to hit 1 billion users by 2030.