Top News Stories – 11th – 17th January 2021

There has been lots going on in the news recently, especially this last week in the business and financial world. Could this be because of increased business and consumer confidence with roll out of the Covid-19 vaccines, with the end of this pandemic in sight?

Of course, much of the news surrounds coronavirus and its updates and progressions. However, I have chosen to limit the amount of c-word-related-news this week, because I think we all need a lil’ bit of a break from it!

I’ve added a ‘thoughts and implications’ section at the bottom of each news story to share my own thoughts on the topic to encourage you to begin analysing the news story in your own way.

So, grab a cuppa and keep reading to get up to date on some of the top commercial news stories from the last week…

1. WHATSAPP UNDER FIRE

WhatsApp came under fire last week following an update to its terms and conditions, which asked users to allow it to share data with Facebook, the platform’s parent company, to come into affect after the 8th February of this year. Users had to accept the terms and conditions if they wished to keep using the app after this time. WhatsApp has since delayed this date to 15th May to ‘clear up the misinformation around how privacy and security works on WhatsApp’ However, although all WhatsApp users received the notification, it does not apply to those in the UK and Europe.

Global downloads of messaging platforms Signal and Telegram have surged whilst WhatsApp’s has shrank. Signal saw 8.8 million downloads in the week following the announcement of WhatsApp’s updated terms and conditions, compared with only 246,000 downloads the week before. Signal uses an end-to-end encrypted messaging app (as does WhatsApp) which means that it uses a protocol that ensures nobody – including Signal – can access the content of the messages. Telegram has proved even more popular, with downloads booming globally from 6.5 million for the week before the announcement to 11 million over the following week.

WhatsApp has said that its policies were in line with “applicable” privacy laws, and the data shared with Facebook does not include messages, groups or call logs. It has been said that WhatsApp sharing users data with Facebook is not new, and has been the case since 2016.

However, it does include:

  • phone number and other information provided on registration (such as name)
  • information about the user’s phone, including make, model, and mobile company
  • internet protocol (IP) addresses, which indicate the location of a user’s internet connections
  • any payments and financial transactions made over WhatsApp

Elon Musk tweeted “Use Signal” soon after WhatsApp announced they were updating its terms and conditions. A single tweet by Elon Musk got the app Signal first spot in the App store.

Thoughts and Implications

WhatsApp has been downloaded 5.6 billion times since its launch in 2016 and has 2 billion active monthly users around the world. Compare this with Signal, who has only 14 million. Therefore, it’s difficult to call Signal, or even Telegram, competitors, since a messaging app is only as strong as its network. But, Signal and Telegram’s network continues to grow, whilst WhatsApp’s is under threat.

The fact that WhatsApp needed to clarify that WhatsApp does not share data with its parent company for those in Europe emphasises how users did not understand how their data was protected, and is the culmination of Facebook’s generally poor reputation with regards to privacy.

Although it may sound impossible for people to switch from WhatsApp, not all messaging platforms last forever, such as MySpace, AOL or BBM. In addition, many people take their privacy seriously and if they feel that WhatsApp is violating this, people won’t hesitate to jump ship. Do you think it could happen?! Let us know below.

2. DELIVEROO TO ENTER STOCK MARKET?

It has been reported that food delivery app company Deliveroo has hired a quarter of investment banks to help with flotation on the London Stock Exchange. According to Sky News, Deliveroo appointed Bank of America Merrill Lync, Citi, Jefferies and Numis to work under Goldman Sachs and JP Morgan on the initial public offering (IPO), which is expected to be launched in or around April. Market sources expect to value this listing at well over £5bn.

Deliveroo has around 45,000 restaurants on its platform in the UK. Deliveroo earlier this week announced plans to expand into a further 100 towns and cities across the UK.

THOUGHTS AND IMPLICATIONS

The surge in revenues that Deliveroo has seen since the beginning of the coronavirus pandemic last year is likely to prompt conversations surrounding whether Deliveroo will be able to continue its momentum when restaurants and hospitality businesses re-open this year.

Recently, Deliveroo has launched a service where customers can reward their riders after their delivery has arrived, which can act as an incentive for people to start working for Deliveroo.

In addition, it has also announced the launch of a service called Brought To You By Deliveroo, which will allow customers to order food from restaurants’ websites, but with the tech company fulfilling the orders’ delivery. This will allow restaurants to reach new consumers and “deepen engagement” with existing customers, Deliveroo said, by being able to drive traffic to their own websites through marketing campaigns and social media. This integrated solution will be particularly beneficial for independent restaurant partners who would otherwise be able to develop the technology independently.

3. JD Sports to Acquire Topshop?

JD Sports is in talks with Authentic Brands Group, owner of US department store Barneys, about joining forces to acquire Topshop from the administrators to Arcadia Group in a serious rescue deal. Additional final offers for Green’s former assets are due this week, with high street firms including Next expected to be among the bidders.

Sir Phillip Green bought the high street group Arcadia in 2002 for £850m. Only three years later, Green paid what remains one of the largest-ever dividends – £1.2bn – to Arcadia’s registered owner, his wife Lady Christina.

The retail sector continues to suffer with Paperchase being another company that is on the brink of collapse, after sales were severely impacted by coronavirus restrictions, placing 1,500 jobs at risk. It has confirmed it has filed a notice to appoint administrators from PWC. The stationary chain has 127 stores and 46 concessions. Paperchase underwent a company voluntary arrangement (CVA) even before the coronavirus pandemic back in March 2019, in a big to ease cost burdens on the business.

THOUGHTS AND IMPLICATIONS

The combination of Authentic brands, which also owns Forever21, and JD Sports, the UK-based sporting goods retailer who is one of the most adept players in British retailing, adds up to a powerful contender to buy Topshop.

Sir Phillip Green bought the high street group Arcadia, who owns Topshop, in 2002 for £850m. However, the Topshop collapse was ‘inevitable’, according to a former boss of its best-known Topshop brand, as Green failed to invest in his retail empire.

A purchase by Next is less likely to lead a Topshop revival with its slightly older customer base, meaning it may struggle to reinstate Topshop’s front of mind appeal amongst Gen Z and millennials.

It comes as no surprise that retail companies continue to suffer. The cumulative effects of all three lockdowns have put unbearable strain on retail businesses across the country. Is this something that will not slow down throughout the year?

4. GOOGLE BUYS FITBIT FOR £1.5mn

Google has completed its £1.5 million ($2.1 billion) acquisition of Fitbit, which has 30 million active users. Fitbit will still take privacy for health and fitness data seriously, noting in a separate press release issued by Fitbit that ““Fitbit health and wellness data will not be used for Google ads.”

However, there still remains serious concerns over the data privacy of Fitbit users. Google has agreed to keep some promises surrounding privacy concerns for 10 years, such as segregating Fitbit user data, retaining third party access to Fitbit’s platform and not to decrease the third-party experience of other smartwatches linked in Android phones.

However, the US Department of Justice has said that its investigation into the acquisition is still ongoing as it explores whether the deal harms US concerns. The deal could face further restrictions and challenges, depending on the outcome of the investigation.

THOUGHTS AND IMPLICATIONS

The acquisition is viewed as a positive one. Google launched Wear OS in 2014, a version of Google’s Android operating system designed for smartwatches and other wearables, but has struggled to make a real impact. By partnering with Fitbit, this gives Google a much stronger foundation to build on for future Android-integrated wearable devices.

Fitbit can also benefit from Google’s software skills and wide developer support, which could help Fitbit’s smartwatches like the Versa (with a similar design to the Apple watch) get ‘smarter’, alongside the the deeper software integration with Android that a closer relationship could offer.

5. BLACKSTONE TO BUY BUTLIN’S OWNER BOURNE LEISURE?

Blackstone, one of the largest investment firms in the world, is looking to acquire a £900 million ($1.5 billion) stake in Butlins’ owner Bourne Leisure. This values the company at around £3bn. Bourne Leisure is also the owner of the Haven chain and Warner Leisure Hotels.

Bourne Leisure is the biggest leisure firm in the UK, employing around 14,000 members of staff. Since the start of the pandemic with sites across the country being forced to close, jobs have suffered. The investment by Arcadia would secure thousands of jobs.

Peter Harris is the largest shareholder in the privately held group, which owns UK hotel operator Warner Leisure. As the founder of the business, he is expected to keep a stake in the business.

The deal would see the US private equity giant, which owns Legoland operator Merlin Entertainments, make its latest bet on a UK company in an industry hit hard by Covid-19, after separately holding talks last month to buy the London-listed private jet services company Signature Aviation. 

THOUGHTS AND IMPLICATIONS

Bourne Leisure has always been a company with a strong balance sheet, which Blackstone is aware of. With Staycations being a thing of the future if travel restrictions are here to stay, they will likely bounce back quite quickly after lockdown restrictions are eased in the coming months. This could be an amazing deal for Blackstone.

6. MORRISONS PAY £10 AN HOUR

Morrisons, one of the big four supermarkets, has become the first to pay a minimum of £10 per hour for all staff. This was negotiated by the retail trade union, Usdaw, and the 96,000 staff members will receive this increased rate.

It’s uncertain as to whether other supermarkets will follow suit. Lidl, however, is already increasing hourly wages for many staff, increasing the rate for 20,000 workers from £9.30 to £9.50 from March.

For Morrisons, an average worker will see their wages rise around £30 per week.

THOUGHTS AND IMPLICATIONS

The pandemic has seen employee numbers at supermarkets swell to cope with increased demand, and are currently still assessing the sustainability of these numbers. Nevertheless, as one of the few retail roles that remain certain right now, the increase in wages by Morrison acts as a serious incentive for people to join the supermarket’s workforce.

Supermarket staff have also had to work under intense pressure and have become frontline heroes in this pandemic. Many consumers may welcome the idea of higher rewards for those staff. A rise of £30 per week per average worker will make a huge difference to many.

Thanks for reading! Want to know how to stay commercially aware? Check out my blog post here.

Disclaimer – All views expressed on this site are my own and do not represent the opinions of any entity whatsoever with which I have been, am now, or will be affiliated.

Posted by

A future trainee solicitor encouraging and supporting social mobility, and showing you anything is possible.

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