Top News Stories ~ 1st – 7th February 2021

1. LASTMINUTE.COM FAILS TO REFUND CUSTOMERS

Online travel agent Lastminute.com have failed to keep to a promise to refund people for Covid-hit holidays. It was agreed that they would pay all outstanding package holiday refunds by the end of January. But, consumer group Which? has reported that several customers still had not received a full refund after the deadline had passed, and that more than £7 million was owed to customers.

Which? has called on the Competition and Markets Authority (CMA) to uncover how many customers were not refunded in time and wish to take appropriate action. Since the start of the Covid crisis, the CMA has written to more 100 package holiday firms to remind them of their obligations to comply with consumer protection law.

Some online travel agents have reported difficulties in securing refunds from airlines to pass on to their customers, meaning many people have reported only receiving partial refunds for their cancelled package holidays. However, under the Package Travel and Linked Travel Regulations 2018, if a package holiday is cancelled by the provider, the customer is legally entitled to a full refund within 14 days. A ‘package holiday’ is a combination of at least two types of travel or travel-related services made through the same source in a single booking, most commonly flights and accommodation.

A CMA spokesperson said: “CMA action led to Lastminute.com committing to pay out over £7m to customers waiting for money back. They must now report to us on how they are complying with the commitments they signed up to and the deadlines agreed. Should it become clear that they have breached these undertakings we will consider further action.”

2. PROPERTY VALUE DROPS

Halifax said that UK property prices fell 0.3% in January to an average of £252,000, the biggest monthly fall since April 2020. The fall ends a seventh-month streak of house price growth dating back to May, when the average UK house price declined by 0.2%.

The latest Bank of England figures show that the number of mortgage approvals fell 1.8% in December to 103,381, the first fall in seven months.

Halifax said that despite the January fall, which has pushed the price of a typical property to its lowest level since October, house prices are still about £13,000 higher than a year ago. However, the lender said the annual rate of house price inflation, 5.4%, has cooled to its lowest level since last August. The annual rate hit as high as 7.6% in November.

THOUGHTS AND IMPLICATIONS

The slowdown we are now seeing in house price growth reflects the looming end to the stamp duty holiday. Looking to the future, when assuming the temporary stamp duty reduction ends, we’re likely to see a slowdown in house price rises.

Despite the short-term outlook of a cooling in prices, more people seem to be looking to move out of cities and are seeking bigger homes with office space and gardens, which could sustain the housing market.

 Photograph: John Lunt/Alamy

3. BIG TECH BOOMS

The relentless rise of the big six tech firms – Facebook, Amazon, Netflix, Google owner Alphabet, Apple and Microsoft, now known as the Fangam stocks – powered US markets last year. Amazon and Apple both raked in sales of £72bn over the past 3 months, which is -25% more than Tesco brings in over a full year.

Despite success, Jeff Bezos has announced that he is stepping down as chief executive of Amazon, which was founded in Seattle 26 years ago and is the 3rd biggest employer in the world with 1.2 million employees. Bezos will be replaced by Andy Jassy. Bezos plans to focus his energy on other ventures, including the Day 1 fund, the Bezos Earth Fund, Blue Origin and The Washington Post. Over the past year, Amazon’s share price is up over 62% and is valued at $1.72 trillion; $650 million more than it was valued at a year ago.

Apple became the words first trillion-dollar company in August 2018. Apple stock is now up over 70%, taking its value up by $1 trillion to $2.3 trillion.

Alphabet, Google’s parent company, has a revenue of $162 billion, which outweighed the size of Hungary’s economy in 2019. Google’s advertising business, including YouTube, accounted for 81% of Alphabet’s fourth quarter sales, which rose 23% compared with a year ago. .

Facebook has said that the pandemic has helped it to grow, despite being the forefront of many news stories regarding concerns over users data. Just this week, Facebook is being sued for “losing control” of the data of around a million users in England and Wales – following from the Cambridge Analytica Scandal where harvested data was used for advertising during elections.

THOUGHTS AND IMPLICATIONS

With size comes power. Google has already inserted its dominance in Australia and threatened to pull out its services entirely if the Australian government proceeded with a new code that would force Google and Facebook to pay media companies for the right to use their content. Therefore, Big tech’s increasing size gives it another big advantage: the bigger it becomes, the harder it is to challenge.

Another problem is its ability to avoid paying the correct tax. The companies paid $155bn less than might be expected under headline tax rates – money that could have been used to fund public services and infrastructure around the world.

There is growing consensus that big tech companies need more oversight. Facebook has also faced much scrutiny over its use of consumer data. But, despite reluctance, big tech companies and social media platforms do seem to be stepping up in terms of responsibility of its users – with Twitter, Facebook banning ex-President Donald Trump from its platforms and any accounts affiliated with pro-Trump violence. Kamala Harris said in 2019 that there needed to be more regulation of the companies, and now Harris is vice-president, it is hoped that this will be investigated further.

Composite: Getty

4. OIL GIANTS FACE LOSSES

Oil giants Shell and BP have reported losses for 2020. Shell has lost £14.4 billion and BP have lost around £13 billion, including the writedown and other non-operating charges. This comes as a result of a decrease in demand for energy, as well as decreased oil and gas prices in response to the coronavirus outbreak.

However, prices have started to rise following the roll-out of the covid-19 vaccines with demand expected to continue to increase in 2021, BP has said. The chief executive of Shell believes that global oil demand will return to ‘some sort of normalcy’ by next year (2022).

It is believed that Aviation will be a significant contributor to the remaining recovery that needs to be seen, which echoes estimates from analysts who see jet fuel demand as the main drag on global oil demand recovery.

Continued low demand for jet fuel will account for 80% of the 3.1-million-bpd gap in oil demand this year compared to pre-pandemic levels, the International Energy Agency (IEA) said in December.

THOUGHTS AND IMPLICATIONS

Could the introduction of electric cars decrease the demand for crude oil entirely? Last year was “pivotal” for BP which bowed to growing pressure to act on its climate impact by setting a target to become a net zero carbon company by 2050, and has set in motion plans to cut its costs and reduce its debt. BP plans to increase its renewable energy portfolio from 3.2 gigawatts (GW) to 50GW by 2030, while producing less oil and gas to help cuts its contribution to the global climate crisis.

Susannah Streeter, a senior analyst at Hargreaves Lansdown, said: “Turning a tanker around with a storm raging was never going to be an easy manoeuvre and these numbers underline just how difficult the conditions are for BP as it attempts a rapid energy transition amid sunken oil demand.”

Photograph: EPA

5. FORD AND GOOGLE’S 6 YEAR PARTNERSHIP

A new six-year partnership between Ford and Google will see millions of Ford vehicles powered by an Android operating system starting in 2023. Team Upshift, the collaborative group that will be established as part of the partnership, will work on creating new consumer services and experiences that will be powered by the Android Automotive operating system.

Team Upshift will aim to push the boundaries of Ford’s transformation, unlock personalized consumer experiences, and drive disruptive, data-driven opportunities. Ford has also named Google Cloud its preferred cloud provider to leverage Google’s world-class expertise in data, artificial intelligence and machine learning.

Android’s operating system will enable drivers to access Google Maps for in-vehicle navigation and Google’s Voice Assistant for handling voice commands in the car without the use of an Android phone. Ford vehicles have come with the automaker’s proprietary Sync system since 2007, which has been featured across its portfolio. It is not clear whether Ford will continue to use the Sync name on this new system.

David McClelland, the vice president of strategy and partnerships at Ford, said that the “relationship between Google and Ford will establish an innovation powerhouse” and it “will accelerate the modernization of our business at Ford, and most importantly, it will let us exceed our customers’ expectations.”

Here’s what this partnership means for drivers:

Google Assistant will enable drivers to keep their eyes on the road and hands on the wheel, by getting things done with only the use of their voice. Google Maps will act as the vehicles’ primary navigation and will give the driver information on real-time traffic, automatic rerouting and lane guidance, enabling drivers to reach their destination faster. Google Play will enable drivers access to music, podcasts and audiobooks. These apps are optimised and integrated for in-vehicle use.

6. FISHERMEN GET HIT

UK fishermen are to be hit with a permanent ban on selling shellfish to EU as they no longer conform to the bloc’s safety standards. This ban is set to include oysters, mussels, scallops, cockles and clams. UK shellfish catches were valued at £393m in 2019.

Since 1st January, thousands of tonnes of British shellfish have been unable to be sold in the EU as they do not comply with Brussels’ third-country import rules. Although the UK government advised fishermen that the ban would only be until April, Politics Home reported that the EC has now said that the ban will be indefinite.

British fishermen produce more than 25,000 tones of mussels each year, with around two-thirds sold to EU countries. Only those landed in “class A” waters can currently be transported from the UK to the EU without the need for purification beforehand. But, most UK waters are not in that category and most exporters used to send their produce to EU countries to get purified. It is simply not cost effective to purify shellfish in the UK and sell onto the EU as the process significantly shortens the shelf life of the product. This will put many British businesses at risk of collapse.

Although, Fish and seafood exporters who have faced post-Brexit disruption at the border are be able to claim a maximum of £100,000 per business as a part of a new £23m fund.

Image: Getty Images

7. VIAGOGO – STUBHUB MERGER

The Competition and Markets Authority (CMA) has stated that Viagogo will need to sell all of its business outside of North America to receive approval for its StubHub merger.

It was found by the CMA that the merger would lead to a substantial reduction in competition in the secondary ticketing market in the UK and consequently harm consumers. To satisfy the CMA’s competition concerns, Viagogo will need to sell its international business, including its UK arm. Viagogo will not have any direct influence over the company as it must be completely separate.

Last year, Viagogo bought StubHub in a £2.9 billion deal. Together, they hold over 90% of the UK’s ticket resale market and are the number 1 and number 2 players respectively in the UK.

The purchaser of Viagogo’s international business must be approved by CMA and they will determine the key terms of the sale, such as the right of the purchaser to use the StubHub brand for the next 10 years.

THOUGHTS AND IMPLICATIONS

FanFair Alliance, a music industry group, called on the CMA to turn its attention to Viagogo’s relationship with ticket touts. “Aside from the acquisition costs, anyone wishing to operate a successful uncapped ticket resale business in the UK would require two things: significant relationships with large-scale ticket touts to supply inventory, and deep enough pockets to outspend Viagogo on Google search advertising,” said spokesman Adam Webb. “That might be good for Google, and it might be good for ticket touts. But we need a conclusion that’s good for UK consumers, and stops them being ripped off.”

The takeover has since been described as the “worst deal in history”, as a result of its poor timing due to the coronavirus pandemic. The £2.9bn price tag could be deemed overvalued, depending on how much Viagogo can get for StubHub’s non-North America business, as a forced seller.

Picture: Alamy Stock Photo

8. SONY SELLING PS5 FOR LOSS

Sony has told investors that it is selling its new PlayStation 5 consoles at a loss. The strategic price point on all of these sales was lower than the cost of production. The cost of manufacturing a PS5 has soared to around $450 per console and has an RRP of $499. The digital addition of PS5 retails at $399 so Sony loss money on every sale.

However, Sonys gaming division saw strong results in the 4th quarter – posting a $2.5bn increase in operation income. The loss from the PS5 was therefore offset by gains in PS4 and additional content sales. “We must keep PlayStation 5’s bill of materials under our control and we need to make the correct number of units in the initial production,” Sony’s Chief Financial Officer Hiroki Totoki said at an earnings briefing earlier this month.

Sony and Microsoft are experiencing massive shortages in the supply of their next generation consoles. The PS5 and Xbox series X are both sold out at almost all retailers as demand for the consoles roar – presumably a consequence of lockdown measures and many people investing in entertainment. It has been warned that shortages could last until mid-spring.

Photo: Charles Sims on Unsplash

Thanks for reading! If you’re wondering how you can stay commercially aware, check out my blog post ‘How to Be Commercially Aware’.

*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. All information provided aims to educate and has been cross-checked for accuracy, but this site accepts no responsibility for any discrepancies.

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

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