Monday 08/04/19

  1. In REGULATION-RELATED NEWS, tech firms are to come under more scrutiny and Fiat teams up with Tesla on emissions
  2. In MONEY-RAISING NEWS, Pinterest sweetens the deal of a dual-structure and Monzo gets a boost
  3. In INDIVIDUAL COMPANY NEWS, Sports Direct gets aggressive with Debenhams
  4. In OTHER NEWS, I bring you Ed Sheeran sake. For more details, read on…



So tech firms will face more scrutiny and Fiat teams up with Tesla

UK moves to end ‘self-regulation’ for tech firms (Wall Street Journal, Sam Schenchner and Parmy Olson) heralds an important (and, let’s be honest, overdue) development for internet companies as the UK government is proposing to create a new regulatory body to enforce the removal of harmful content from the internet. It will force companies such as Facebook and Google to take “reasonable and proportionate” action on a broad range of illegal or potentially harmful content – including things like terrorist propaganda and cyberbullying – on their respective platforms. The new body will be able to punish non-compliance and more details will be forthcoming on this. * SO WHAT? * This is just part of an overall movement to bring to account hitherto “self-regulated” internet companies that have consistently been distancing themselves from responsibility of what their users disseminate. Germany last year implemented a law that imposed €50m fines for companies that systematically failed to remove hate speech and the EU is currently debating a law that could threaten fines of up to 4% of annual worldwide revenue from companies that don’t remove all terrorist material within an hour of being posted. The success, or not, of this new initiative will depend on whether the regulator will have actual teeth and how willing it is to bite. Internet companies have deep pockets and powerful lobbyists and will no doubt do all they can to

deflect any accusations – so we’ll just have to see how this works in practice. FWIW, I think this is a step in the right direction – and compliance with these new guidelines will probably increase costs for the internet companies concerned in terms of increased resource having to be funneled into compliance and software development. Great news for AI software development companies, I would have thought…

Fiat Chrysler pools fleet with Tesla to avoid EU emissions fines (Financial Times, Patrick McGee and Peter Campbell) is a bit of a bizarre story at first glance in that Fiat Chrysler Automobiles (FCA) has agree to pay Tesla hundreds of millions of euros to be counted in with Tesla’s fleet in order to offset its CO2 emissions obligations that will effectively lower its overall average figure. Interestingly, EU allows manufacturers to offset their emissions obligations internally – so VW could offset VW, Seat and Skoda emissions against those of Porsche and Audi, for instance. FCA is planning on selling hybrid and electric vehicles in the future but is seen to be a bit behind the others at the moment, hence this stop-gap measure. * SO WHAT? * This is pretty interesting as it is the first time that non-related manufacturers have pooled their emissions together to comply with environmental regulations in Europe. However, Tesla has generated some significant revenues in the US by selling zero emission vehicle credits, although these earnings can be volatile. Last year it earned $103.4m by doing this versus $279.7m the year before. Easy money for Tesla, eh??



Pinterest tries to sweeten its flotation deal and Monzo attracts more money…

Following on from the IPO frenzy on Lyft, Pinterest is expected to set IPO price range below last valuation (Wall Street Journal, Maureen Farrell) shows that the online image-search company looks like setting its sights on a valuation below that of their most recent funding round in 2017. The company is starting the investor roadshow today (this is where the company does a whirlwind tour of the world visiting investors and telling them how great they are and how they should invest loads of money in them) and the rumours are that the price range will be lower than expected – but don’t hang your hat on that as these things can change quite quickly. Look at what happened with Lyft – they eventually hiked up their price range, so this could no doubt happen with Pinterest. The company has over 250million monthly active users and has been reporting chunky revenue growth and shrinking losses. Interestingly, Pinterest offers investors ‘sunset clause’ on terms of $12bn float (Daily Telegraph, Natasha Bernal) highlights an extra sweetener for investors who are probably getting increasingly disgruntled with getting shares from tech IPOs that get b*gger all voting rights. Basically, it says that after seven years as a public company, all shareholders would

be given a vote. That sounds to me fractionally better than nothing, but maybe it will sway some investors. * SO WHAT? * Pinterest may have been mindful of Lyft’s example where it floated at a very high valuation and subsequently fell (although it’s now back to trading above its IPO price – but, let’s be honest, I bet that’s got a lot to do with the underwriters etc. stabilising the price – the real test will come when they come out of the agreed period), so it perhaps pitching itself conservatively. We’ll see soon enough, anyway, and I have to say that the company looks like it’s on the right trajectory. 

Nearer home, Monzo nears £2bn valuation to fund mortgages and pensions bid (Daily Telegraph, James Cook) shows that London-based digital bank Monzo is in the early stages of raising £100m in funding that could effectively value the company at around £1.9bn. This is a sizeable increase from its most recent fundraising in October when the implied valuation of Monzo was £1bn. * SO WHAT? * Monzo is still loss-making, but the extra cash will help it to offer more products to its client base and develop a financial hub for customers to access their current account in addition to savings, pensions, mortgages and utility bills. Digital banking continues to be a hot area with the likes of Starling Bank and Revolut being key competitors who have also raised vast sums of cash recently!



Mike Ashley continues his pursuit of Debenhams

Ashley accuses Debenhams of ‘falsehoods’ (The Times, Miles Costello) shows that Mike Ashley is continuing to fight against Debenhams’ current management as last night, he accused members of the board of lying. The Sports Direct chief exec owns 29.9% of Debenhams and he, along with two colleagues, took two lie detector tests to verify their events of a meeting that took place with the department store’s management about a potential £150m

rights issue. He then demanded that Debenhams’ chairman and one of its non-exec directors do the same thing because “it is Sports Direct’s contention that the board of Debenhams and its advisers have undertaken a sustained programme of falsehoods and denials. The fact that they can so openly lie in their recollection of joint meetings with Sports Direct is beyond the pale”. Ashley was so incensed that he said Debenhams’ shares should be suspended and that the regulators should be called in to investigate. * SO WHAT? * Ashley is not letting this one go and, although I think that the lie-detector thing is just a bit of a stunt, it has publicised something that I am sure the Debenhams board would prefer to have kept on the down low. Surely this is something that will come to a conclusion very soon, but it’s not good for sentiment in the meantime…



And finally, in other news…

I thought I’d leave you today with this rather unusual product: Limited run of commemorative Ed Sheeran sake on sale from 8 April (SoraNews24, Master Blaster Class.