Friday 12/07/19

1. In BREXIT NEWS, the Bank of England warns of a No-Deal shock
2. In BIG TECH NEWS, a UK/US clash is in the offing on digital tax, Amazon aims to futureproof its staff, Facebook wants to go shopping for gaming studios, Nintendo jumps on Switch Lite while Google and Apple have privacy issues
3. In INDIVIDUAL COMPANY NEWS, Reckitt pays to settle an opioid case and M&S loses yet another fashion chief
4. In OTHER NEWS, I bring you an annoying picture…

So the Bank of England sounds a no-deal warning…

Bank of England warns no-deal Brexit could trigger economic shock (The Guardian, Richard Partington) highlights the central bank’s thoughts on what could happen if we had a no-deal Brexit – that it could result in a massive shock to the UK economy and disrupt EU companies by cutting them off from London-based banks. The Bank’s governor, Mark Carney, said that “Although such disruption would primarily affect EU households and businesses, it could amplify volatility and spill back to the UK in ways that cannot be fully anticipated or mitigated. * SO WHAT? * No-one knows what’s going to happen because something of this magnitude has never

been done before – and that includes the “experts”! I have to say that this all reminds me of the Millenium Bug (remember that, anyone??) where everyone was getting hysterical about systems failing and planes falling out of the sky because they couldn’t cope with going from 1999 to 2000 – and then nothing happened. I really think that even if we get a no-deal, countries will try to work together to make things happen – because they have to. It’s all very well for the politicians in Brussels and Westminster to squabble amongst themselves as part of a massive (and expensive) game of chicken and who has the biggest cojones – but people on the ground are going to have to deal with some pretty dramatic stuff at borders and in supermarkets etc. and I believe they will make things work. Yes, there will be disruption, but I am hoping that everyone will come to their senses and minimise any potential madness quickly otherwise things could get very nasty. 

The UK is about to poke the bear with a sharp stick, Amazon aims to retrain, Facebook aims at gaming takeovers, Nintendo gets a Lite boost while Google and Apple have privacy problems…

Britain set for clash with US on digital tax (The Times, James Dean) shows that we have decided to go ahead with a special tax on Amazon and Google, amongst other tech giants, despite Trump telling US trade rep Robert Lighthizer to investigate where a similar plan by France was “dicriminatory or unreasonable”. France yesterday approved a 3% digital sales tax in the Senate, which will apply retrospectively from the beginning of this year. * SO WHAT? * US tech giants pay tiny amounts of tax in Europe because they funnel all their sales through places that have very generous tax regimes, like Ireland and Luxembourg. Chat about imposing a digital sales tax ostensibly started after the US put tariffs on steel and aluminium imports from the EU last year (but there have been rumblings about this for ages). The new UK digital sales tax will come into force in April next year and apply to companies with over £500m in global revenues and over £25m in UK revenues. This tax is going to be an interim measure while talks with the OECD continue over how to tax companies in a digital age. Call me cynical, but I wonder whether this tax will ever really see the light of day. The timing of this announcement comes BEFORE the next Prime Minister has been chosen, it’s an “interim measure” and it’s already p!ssed Trump off as he gets closer to election year – surely this is a massive gift to whoever ends up in Downing Street? I say that because it could be used as a lever to get a trading deal/some concessions from the US (who have thus far given us nothing). The incoming PM can probably kill it IF a better trade deal is hammered out with the US, but they could also use it for getting a better deal with the Europeans – i.e. we’ll kill this tax if you don’t give us a better deal and leave you on your own (which could lead to big tech companies coming to the UK, especially if we brand ourselves a new tax-friendly country). Obviously, it wouldn’t be as clearcut as I’m describing it, but I certainly think this tax could be a useful negotiation tool. BoJo must be loving it as this could hand him (if he gets the top job) an instant win with his BFF Donnie T.

Amazon mass retrains US staff for tech future in £558m drive (Daily Telegraph, Natasha Bernal) highlights Amazon’s plans for the future as it has earmarked over $700m to up-skill over a third of its workforce (100,000 out of 275,000 full-time workers in the US) by 2025 as it pushes to automate tons of manual roles. This will be with a view to them using these skills within Amazon or outside it. It’s unclear at the moment whether this would be rolled out overseas. * SO WHAT? * This is a massive declaration of intent that it will be automating big time. Although

current robot capability is limited, it is obviously going to grow. At least Amazon is offering the opportunity for employees to do this, rather than just wittling them down over time. I suspect that other companies planning to automate processes won’t be quite as generous.

In gaming, Facebook looks to raise game with takeovers (The Times, Tom Knowles) signals the social media giant’s desire to get more of its 2.3/2.7bn users (depending on whether you measure this by “just” Facebook, or whether you include Insta, WhatsApp and FB Messenger) playing games on its virtual reality headsets, sales of which have been disappointing since it bought Oculus for $2bn in 2014. It looks like they have set aside about $1bn to make acquisitions of entire gaming studios to boost their offering. The new Oculus Quest costs $399 and doesn’t require a computer and Facebook has already signed deals to make VR versions of games such as Assassin’s Creed and Tom Clancy’s Splinter Cell. * SO WHAT? * What’s taken it so long?? This sounds great, but I also think that VR headsets are still too big and clunky for truly widespread adoption. At least the games offering is likely to get better – which may tempt more people into the joys of VR. Gaming is going to get very exciting over the next few years what with the advent of Google Stadia (the “Netflix of games” platform), Apple’s Arcade (a gaming subscription service) and Snap’s moves in this area – and 5G is going to give it the tech backdrop it needs to all become possible.

Nintendo shares jump after Switch Lite announcement (Financial Times, Daniel Shane) highlights Nintendo shares hitting a nine-month high in trading yesterday on the announcement of a new, cheaper version of its popular console. It will be released on September 20th, will sell for $199.99 and have more basic functionality than its older and pricier sibling. * SO WHAT? * Investors are clearly hoping that this will boost demand for the Switch and lengthen the life of this hit product!

Then it appears that there are some privacy issues that need to be ironed out in Google contractors listen to recordings of people using virtual assistant (Wall Street Journal, Sarah E.Needleman and Parmy Olson) as Belgian public broadcaster VRT NWS said in a report this week that Google employs contractors around the world to listen into recordings of people’s conversations with Google Assistant. * SO WHAT? * I guess that they have to do this in order to improve voice recognition functionality, but it is spooky nevertheless. Not great PR, but I don’t think people will be abandoning their smart speakers en masse.

Talking about privacy, Apple pulls walkie-talkie app after glitch creates eavesdropping vulnerability (Wall Street Journal, Sebastian Herrera) shows that Apple has temporarily disabled the Walkie-Talkie app on Apple Watches to solve a glitch which can let someone listen in to someone else’s iPhone conversation without consent. Apple remained tight-lipped on the details while it tries to fix the issue. * SO WHAT? * This just goes to show how data privacy is an issue for even large, deep-pocketed firms.

Reckitt pays a massive $1.4bn to settle an opioid case and M&S loses yet another fashion chief…

In Reckitt pays $1.4bn to settle opioid case with US government (Daily Telegraph, Julia Bradshaw) we see that Reckitt Benckiser has agree to pay $1.4bn to the US government to settle the investigation into its alleged involvement in dodgy sales and marketing of an anti-addiction drug, Suboxone Film. * SO WHAT? * This will lift

some of the cloud off the stock for the moment, but its spinoff Reckitt Pharma (renamed Indivior), is still facing a $3bn fine in a related criminal case. However, this current deal would suggest that another deal could be done with Indivior – and if that is the case, there will be a lot of relief at Reckitt.

M&S ousts boss of its struggling fashion arm (Daily Telegraph, Laura Onita) highlights the ongoing turmoil at M&S as it continues to try to get its fashion offering right. Jill McDonald has been ousted after less than two years in the job. The turmoil continues…

And finally, in other news…

I thought I’d leave you with Can you spot the bee in this flower-filled brainteaser (MSN, Gili Malinsky https://tinyurl.com/y26qms5x). I warn you – this is very annoying!