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Silicon Valley tech giants face a crackdown on their market dominance as the government launches its Digital Markets, Competition and Consumer Bill tomorrow. The bill will deliver regulation designed to stop companies such as Facebook owner Meta, Google owner Alphabet, Amazon and Apple stifling competition. It will grant formal powers to the digital markets unit within the Competition and Markets Authority (CMA), and the watchdog will gain new powers over companies that are deemed to have strategic market status. New takeover rules could stop acquisitions that eliminate smaller firms before they can develop a new service or product that poses a threat to more established players. Efforts to assess technology deals came after a 2019 review by Jason Furman, President Obama’s chief economic adviser. The review said the CMA “should develop and use a clearer framework for looking beyond current market conditions to examine how the transaction might affect future innovation and consumer welfare.” It added: “This requires understanding the kinds of facts that indicate a transaction poses risks.”

 

The Times

A new report from UK lawmakers calls on regulators to act to head off “significant risks” posed to workers by artificial intelligence programs such as ChatGPT. Parliament’s Business, Energy and Industrial Strategy Committee said a new taskforce on AI should investigate whether legislation needs to be updated to protect workers. “There is a significant risk from the lack of attention on the unwelcome or unintended consequences of the use of technology and automation in the workplace, whether that is in the warehouse or in a worker’s home,” the committee said in its report on the UK labour market, which also raised concern about the retraining of workers for the emerging technologies and questioned whether current laws protect rights and privacy when AI is used in recruitment and the surveillance of workers.

 

Bloomberg

American economists who, just after Silicon Valley Bank collapsed, crunched 5.4mn tweets mentioning bank stocks since 2020 have concluded that “social media exposure led to bank run risk rather than simply reflecting it.”

 

Financial Times

Insurer Allianz has warned that businesses may struggle to access credit as operating costs hit their highest levels since 2008 and late payments soar. Credit is set to become more expensive and in shorter supply as companies become slower in making payments. While operational costs as a proportion of turnover have hit their highest level since the financial crisis, late payments also climbed last year, with nearly a fifth of businesses reporting that they were paid for their services after 90 or more days. Maxime Lemerle, lead analyst for insolvency research at Allianz, said that while late payments have driven up the costs of running a business, “lower growth, higher inflation, the higher cost of financing and more non-payments have all contributed.” Figures from Bibby Financial Services, which provides financial services to SMEs, show that the average level of bad debt - where a company suffers because clients fail to pay the full sum invoiced – has risen by 61% in the past year. Smaller companies have £16,641 of bad debt on average. Six in ten businesses said it was taking longer for customers to pay invoices in full.

 

The Times

Dozens of retail, hospitality, and tourism leaders have written a letter to the Chancellor of the Exchequer calling for the return of tax-free shopping for overseas tourists. The leaders argue that removing the VAT refund for visitors has been a mistake and that reinstating it could bring a multibillion-pound boost to the economy. Research by Oxford Economics suggests that tax-free shopping could bring a much-needed £4.1bn boost to GDP and support 78,000 jobs. Sir Rocco Forte, British Airways and Fortnum & Mason are among the 68 signatories of the letter.  Manju Malhotra, chief executive of Harvey Nichols, another signatory to the letter, said EU and international residents had “diverted their spending from the UK into Europe with the financial incentive of being able to shop tax-free,” adding “This doesn't just impact retailers like Harvey Nichols but the whole ecosystem of hospitality and businesses across the UK, which benefit from high-value customers visiting our country.”

 

Daily Mail

Analysis shows that inflation in the UK currently exceeds the average seen across European Union countries. According to Statista’s harmonised index of consumer prices, average inflation across the bloc hit 10% in February, while in the UK the rate was just higher at 10.1% in March, having fallen from 10.4% in February. However, the data shows that some EU nations recorded far higher rates, with inflation in Hungary coming in at 26.2% and 21.4% in Latvia. Czechia, Estonia, Lithuania, Poland, Slovakia, Bulgaria, Romania, Croatia, Austria and Italy all saw inflation exceed the UK’s rate in February. At the opposite end of the scale, Luxembourg saw the lowest inflation rate at 5.8%, followed by Spain (5.9%) and Malta (6.8%).

 

Metro

Credit Suisse investors who had $4bn of bonds wiped out in the forced takeover of the bank by UBS are suing the Swiss Financial Market Supervisory Authority (Finma). Law firm Quinn Emanuel Urquhart & Sullivan is representing the bondholders, who say they have been “unlawfully deprived of their property rights.” Typically, bondholders rank above shareholders when a company collapses, but the entire value of AT1 bonds worth $17bn were wiped out in the UBS deal, while Credit Suisse shareholders took a significant cut in the value of their shares. Thomas Werlen, managing partner of Quinn Emanuel in Switzerland, said: “Finma’s decision undermines international confidence in the legal certainty and reliability of the Swiss financial centre. We are committed to rectifying this decision, which is not only in the interests of our clients but will also strengthen Switzerland’s position as a key jurisdiction in the global financial system.”

 

Financial Times

The Guardian

A former London trader turned cooperating witness has testified at a German criminal trial that the chief executive officer of asset manager Duet Group took all major strategic decisions on a controversial dividend-tax trading strategy that cost Germany €92m. The ex-Duet trader Aneil Anand told a court in Bonn that so-called cum-ex trades - a strategy that took advantage of a loophole in how Germany collected dividend tax - was an important business to Duet, and the firm’s CEO Henry Gabay was the most involved of the three partners who owned the business. “Given the importance of that business, we would regularly communicate, either meeting face to face, on a regular basis, or by email,” the defendant-turned prosecution witness said. “They were involved in the discussions and they had to agree. If they hadn’t agreed, they could have stopped it from happening,” Anand added.

 

Bloomberg

Almost 50 MPs and peers, including David Davis, John McDonnell and Tim Farron, have written to Mike Ashley’s Frasers Group, condemning the use of “live facial recognition” (LFR) cameras in the company’s stores. The letter, co-signed by privacy groups Big Brother Watch, Liberty and Privacy International, described LFR as “invasive and discriminatory” and called for its use to be ended. The letter claimed that the technology was inaccurate and ineffective and disproportionately impacted people of colour and women. In March, it was revealed that Sports Direct and Flannels, two of the brands operated by Frasers Group, were using the cameras in at least 27 stores. Previously a spokesperson for the company has said surveillance is carried out to “ensure the safety of our staff and to help prevent theft”. The Information Commissioner’s Office has issued a warning about the use of LFR, citing concerns about its automatic collection of biometric data at speed and scale without clear justification.

 

The Guardian

Legislation to bolster laws on sexual harassment in the workplace looks set to be shelved after more than 40 amendments from Tory backbench peers choked its progress through the UK parliament.

 

Financial Times

Industrial and Commercial Bank of China, China’s largest bank, is being sued by Dutch lender ING for losses suffered in several copper deals.

 

Financial Times

Richard Browne, the director of the National Cyber Security Centre, has advised government departments to remove TikTok from work devices if the app is installed because security threats cannot be ruled out. “It does not differ in lots of ways from many social media applications. In many ways, it is a typical social media application,” he said. “However, it does have extremely high permissions. It’s not a secret, it says this in the terms of service, and also gathers and stores very large amounts of user data, including sensitive personal data. So, it is on the very high end, if not the highest end, in terms of the amount of user data it collects.” That said, TikTok can still be used in exceptional cases where there is a business need, such as for press purposes, Browne said.

 

Evening Standard

The Confederation of British Industry (CBI) has suspended all activity until June after a second claim of rape against an employee at the group drove major companies to terminate their membership. The organisation will hold an extraordinary general meeting in the summer when restructuring proposals will be put forward. On Friday, retailer John Lewis was among the high-profile firms to quit following the latest allegations. BMW, Virgin Media O2, insurers Aviva, Zurich and Phoenix Group also quit, along with NatWest, Mastercard, Lloyds of London, Schroders, and EY. Many others suspended membership, including GSK, AstraZeneca, Tesco, Sainsbury's, Asda, Marks & Spencer, British Land, PwC and Manpower Group. Allegations of a rape at a CBI summer party in 2019 and other sexual misconduct at the organisation emerged earlier this month.

 

BBC News

Sky News

Bloomberg

Financial Times

Shareholder advisory group ISS has said HSBC investors should vote against a resolution by the bank’s biggest shareholder Ping An that would see the spinoff of its Asian business. ISS said the proposal “lacks detailed rationale.” Fellow advisory group Glass Lewis has also advised investors against supporting the proposal, saying Ping An’s call for HSBC to consider strategic options lacks merit. While insurer Ping An has accused HSBC of not giving its strategic ideas sufficient consideration, the bank says it has discussed the plans on numerous occasions and consistently concluded that they would destroy shareholder value and be too costly to implement. Meanwhile, HSBC is braced for a shareholder revolt against chief executive Noel Quinn over the bank's alleged links to human rights abuses in Hong Kong. Shareholder advisory service Pirc has told investors to vote against Mr Quinn's re-election to the board and has also advised investors to oust Dame Carolyn Fairbairn, chair of the pay committee.

 

The Times

City AM

The Mail on Sunday

Analysis by EY-Parthenon shows that UK-listed companies issued 75 profit warnings in Q1, up from 72 in Q1 2022 and the highest first-quarter total since the start of the pandemic in 2020, when a record 305 were issued. The report cited “persistent economic uncertainty” as a key factor behind the rise in profit warnings. Jo Robinson, a partner at EY-Parthenon, said: “The extraordinary strength of headwinds over the last two years has left some businesses facing recession-like conditions.”

 

Financial Times

Daily Mail

Hammerson's directors have recommended shareholders oppose activist investor Lighthouse Properties' proposal to install two new directors on the board. While Lighthouse has proposed adding Nick Hughes and Craig Tate as non-executive directors at its annual meeting on May 4, directors at the shopping centres owner say there is no "clear or persuasive case" to support such a move. Shareholder advisers ISS, Glass Lewis, Pirc and IVIS have told investors to vote against Lighthouse's resolutions. Hammerson's second largest investor, APG Asset Management, which holds 20% of Hammerson stock, said it was "in the best interest of the company and its stakeholders" to keep the board's present membership.

 

The Times

Campaign group TaxWatch has criticised HMRC for a "weak" approach to tackling the creators of schemes designed to reduce workers' tax bills. It said that while the tax office has pursued tens of thousands of users of "disguised remuneration" schemes, too few enablers of avoidance and evasion have faced serious sanctions. Fewer than six financial penalties for enabling failed tax avoidance schemes have been issued since 2019, while fewer than fifteen criminal investigations have been opened since 2017. HMRC estimates that 31,000 people used disguised remuneration schemes in 2020/21, resulting in the loss of an estimated £400m in tax. An HMRC spokesman said: "We have slashed losses to tax avoidance schemes for individuals by more than two thirds over the last decade,” adding “A hard core of avoidance promoters remain, but we are determined to drive them out of business.”

 

The Times