1. BOEING TO PAY £1.8 BILLION IN CHARGES
Boeing has agreed to settle criminal charges with the US Justice Department for $2.5bn (£1.8bn). Boeing was found to conceal critical safety flaws and information about changes to an automated flight control system, known as MCAS, which resulted in two deadly crashes. This decision meant that pilot training manuals lacked the information about the system, which overrode pilot commands based on faulty data, forcing the planes to nosedive after take-off.
The US Justice Department said that the firm chose “profit over candour” by “concealing material information from the DAA concerning the operation of its 737 Max airplane” in an effort to “cover up their deception”.
Around $500m will go to families of the 346 people killed in the tragedies. $1.77 billion of the $2.5 billion sum will go Boeing’s customers who were impacted by the grounding of the 737 Max. $243 million will be paid as a penalty. Under the terms of the agreement, Boeing was charged with one count of conspiracy to defraud the US, which will be dismissed after three years if the firm continues to comply with the deal.
Acting Assistant Attorney General David Burns said, “The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers”. Attorneys for the victims of the Ethiopian Airlines crash said the deal on Thursday would not end their pending civil lawsuit against Boeing and have said that the allegations in the prosecution agreement were just the “tip of the iceberg of Boeing’s wrongdoing”.
The 737 Max was reapproved for service by US aviation authorities in November 2020, but, undoubtedly, Boeing will be carefully watched for the foreseeable future.
2. BOOTS OWNER SELLS WHOLESALE BUSINESS
Walgreens Boots Alliance, the owner of Boots, has agreed to sell the majority of its Alliance Healthcare wholesale and distribution business in a bid to focus more on its retail operations and health initiatives for a huge $6.5 billion (£4.8 billion).
The Boots parent company said it agreed to a deal to sell the business to US drug wholesaler AmerisourceBergen, who is to acquire a majority stake for $6.28 billion in cash and two million AmerisourceBergen shares. Walgreens Boots Alliance is the largest investor in AmerisourceBergen, already owning a near 30% stake, after the companies launched a partnership in 2013.
Alliance Healthcare UK will remain as Boots’ distribution partner until 2031, despite the sale. In the US, Alliance will continue its distribution partnership for Walgreens Boots Alliance which has been extended three years until 2029.
Drugstore chains and other retailers were hit hard, particularly last spring when the pandemic forced shoppers to stay home and shop online. Walgreens estimated in October that the pandemic shaved about $520 million from its operating income in its final quarter of fiscal 2020. But, the drugstore chain also grew sales and prescriptions in the US and saw some improvement through its Boots stores in the UK.
Shares of AmerisourceBergen Corp jumped more than 8% to $105.78 Wednesday afternoon. Walgreens shares rose more than 4% to $43.10.
This sale comes as tech giant Amazon makes plans to enter the pharmacy business in the UK, who has already launched its pharmacy business in the US. As Amazon enters the market, small and even large pharmacies must fight for their market share.
3. SOCIAL MEDIA COMPANIES CRACK DOWN ON TRUMP
Former President Donald Trump’s online presence has been restricted by social media platforms. This is since Trump has baselessly yet consistently protested that the recent US election result was fraudulent and encouraged his followers to take action.
Trump-supporting rioters stormed and ransacked the US Capitol last week in an attempt to overturn the election result, which resulted in 5 peoples deaths. Rather than ordering people to return home immediately and condemning the violence, Trump took to social media and asked people to “remain peaceful”. Eventually, Trump asked supporters to go home but praised their efforts.
Since then, almost every major social media site has restricted or banned Trump indefinitely, including Twitter, Twitch and Facebook who have only ever issued mere warnings about fake news on Trump’s posts. TikTok, Snapchat and Reddit have banned Trump’s speeches and related content that could incite violence regarding the election.
Twitter’s decision to permanently suspend Donald Trump from its platform, where Trump has 88 million followers, could justify tightening the regulation for social media companies, a cabinet minister has suggested. Health Secretary Matt Hancock, former culture secretary, said this raised significant questions about how social media companies are regulated. Twitter justified its decision to permanently suspend Trump’s account due to the “risk of further incitement of violence”.
Whether social media companies are ‘platforms’ or ‘publishers’ has been a long-standing issue. Traditional publishers have long complained that, by arguing that they are platforms and not publishers, social media companies have been able to evade the legal obligations imposed on organisations such as news websites that have far less influence or financial clout.
The Commons culture committee have said that a new category for social media companies should be created which is not either a ‘platform’ nor a ‘publisher’ which would result in tech companies assuming legal liability for “content identified as harmful as it has been posted to users”.
4. BITCOIN CONTINUES TO BOOM – BUT WILL THE BUBBLE BURST?
The price of Bitcoin’s currency is soaring, and last week it hit more than $40,000 for the first time, having doubled in less than a month. Since the pandemic was first declared in March last year, its price has jumped by more than 700% from about $5,000.
Analysts at JPMorgan have said bitcoins could be worth as much as $146,000 apiece if they were to become established as gold. In the past, investors have bought assets such as gold as they are perceived as ways to insure against inflation because they usually hold their value during times of economic stress. Now, analysts argue bitcoin could rival precious metals as an alternative.
Bitcoin firm Mode Global, which has an app allowing investors to buy and hold bitcoin, saw trading volumes on its platform shoot up by 1500% between August and December 2020. The company is so confident about the future of bitcoin that in October it became the first UK-listed company to invest 10 per cent of its cash reserves in the digital currency. Its shares shot up 34 per cent, or 16p, to 63p last week.
Nikolaos Panigirzoglou, managing director at JP Morgan, said that bitcoin could suffer a sharp drop if it ballooned any further and had probably hit its peak for the year. Sceptics warn that the crypto boom could be heading for trouble. The economics professor Nouriel Roubini, a long-time critic of bitcoin, insists it has no intrinsic value. “The price of bitcoin is totally manipulated by a bunch of people, by a bunch of whales. It doesn’t have any fundamental value,” he told Yahoo Finance just before Christmas. “We’re close to the point where the hyperbolic bubble is going to go bust.”
But, to put Bitcoin’s growth into context, if you bought $30 worth of Bitcoin in January 2011 and held it till today, your holdings would now be worth $4,000,000.
5. ELON MUSK BECOMES WORLD’S RICHEST PERSON
Elon Musk has become the world’s richest person as his wealth tops $185bn (£135bn) after Tesla’s share price increased last Thursday, overtaking Amazon founder Jeff Bezos who held the top spot since 2017.
Musk’s net wealth reached a huge $190 billion last week. Tesla surged in value and hit a market value of $700 billion (£516 billion) for the first time last Wednesday, which is worth more than Toyota, Volkswagen, Hyundai, GM and Ford combined. Musk reacted to the news of being the richest person in the world by replying to a Twitter user sharing the news with the comment “How strange”, and continued it with “Well, back to work…”.
Bezos’ split reportedly helped Musk to overtake him, as he gave his ex-wife Mackenzie Scott a 4% stake in the business. The threat of regulation has meant Amazon’s stock has not risen as high as it might otherwise have done.
Musk has reiterated his pledge to build a self-sustaining city on Mars using his vast wealth. A tweet of Musk is pinned to his twitter account and it reads “About half my money is intended to help problems on Earth, and half to help establish a self-sustaining city on Mars to ensure continuation of life (of all species) in case Earth gets hit by a meteor like the dinosaurs or WW3 happens and we destroy ourselves.”
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