Court victory for Uber drivers, Paris trumps Airbnb and Renault crashes
"This ruling will fundamentally reorder the gig economy and bring an end to rife exploitation of workers ... Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom," said James Farrar, of the App Drivers and Couriers Union. Groups like Farrar'shave been unequivocal in their response to the UK Supreme Court's ruling on Friday that the ride-hailing app's drivers are entitled to workers' rights.
For drivers, there is vindication and compensation for lost pay. Employment lawyers and unions, however, agree that the case has enormous implications far beyond events at Uber. The court's decision may ultimately mean new legal definitions of "self-employment" in UK law, potentially transforming the casualized, so-called "gig economy."
In another landmark legal ruling, the Court of Cassation in Paris has backed city authorities' restrictions on short-term letting companies such as Airbnb. Could other European capitals, squeezed by both rising tourism numbers (at least before the pandemic) and also a shortage of affordable housing for residents now follow the French capital's lead?
It promised to be a eventful congressional hearing in Washington and it didn't disappoint. Cross-examined for five full hours, Vlad Tenev, the Bulgarian-American billionaire founder of the trading app Robinhood, admitted his firm would not have had enough cash to meet a margin call at the end of last month. Senators from the House Financial Services Committee, investigating the "Reddit Rally" affair, still seem far from happy with the evidence from some of the witnesses.
And finally, Australia's Prime Minister Scott Morrison has vowed no backing down in the country's ongoing battle with Facebook on a fairer deal for access to domestic news content. Just how big has Facebook's share of the global advertising revenue market become?
Read on for this and more of the day's business news in full.
Britain's top court has ruled definitively that Uber drivers are entitled to workers' rights such as the minimum wage. In what looks set to be a major blow to the ride-hailing service, the UK's Supreme Court has dismissed Uber's appeal against a landmark case made by two drivers in 2016, in which they claimed they should be technically classed as workers and were entitled to the same rights as other drivers in more formal employment.
The unanimous decision backed the original employment tribunal in a ruling that could affect millions of workers in the so-called "gig" economy.
Uber, which will not now be able to launch further appeals, has said the ruling applies to only a small number of drivers, adding recent changes have given them "even more control over how they earn and provide new protections such as free insurance in case of sickness or injury." Lawyers representing more than 2,000 workers said they could now be due up to $16,000 each.
Vlad Tenev, the boss of online trading platform Robinhood, has defended his company's role in the recent "Reddit Rally" at a congressional hearing, despite admitting that the firm did not have enough cash to meet a capital call from investors last month. In a five-hour session, Tenev was grilled by senators over Robinhood's decision to suspend some shares from trading late last month, as stock like that of retailer GameStop and cinema group AMC boomed after a concerted buying campaign by amateur investors. Tenev described claims that the site was acting to help hedge funds that were losing money as "absolutely false."
Under cross-examination, Tenev agreed it would have been a "total catastrophe" if Robinhood had failed to meet the capital call from its equity clearing house on January 28 and had been obliged to liquidate the positions of its 13 million clients. During the hearing he also apologized to the family of Alex Kearns, a 20-year-old Nebraska student who killed himself last summer, wrongly believing he had lost more than $750,000 in trading options on Robinhood, calling his death "deeply troubling."
Also giving evidence, billionaire financier Kenneth Griffin of the Citadel hedge fund denied that payment practices to brokerage firms like Robinhood were being manipulated to the disadvantage of customers. In a heated exchange, congressman Brad Sherman accused Griffin of avoiding answering questions when he claimed that so-called "order flow payments" were determined by the size of the trade, not other factors.
French car giant Renault tumbled into a record loss last year of $9.7 billion, worse than analysts had expected, although the auto maker said the major losses were recorded in the first half of the year. Describing 2020 as a "year of contrasts," the firm reported a second-half operating margin of 3.5 percent, although group revenues for the year were down 22 percent at $52 billion. CEO Luca de Meo has warned the sector faces a painful 2021, saying "unknowns regarding the health crisis as well as electronic components supply shortages" will continue to drag on growth. Renault has estimated the global microchip shortage could reduce its production this year by 100,000 vehicles.
The U.S. Congress is considering measures to make it easier for smaller news organizations to negotiate terms with "Big Tech" platforms over issues such as revenue sharing. The proposals by Republican senators come as Australia's Prime Minister Scott Morrison warns that Canberra will not back down in its planned News Media and Digital Platforms Bill, despite Facebook blocking scores of local sites in response. The proposed legislation would oblige multinational tech firms such as Facebook and Google to pay for access to domestically produced news content in Australia. The U.S. bill is modeled on a previous attempt in 2019 that would have allowed small publishers to band together to negotiate with tech firms without facing antitrust scrutiny.
The latest data on the two largest EU economies show business activity in Germany has continued to expand even in lockdown, while the slump in France's services sector is threatening a second recession in the country. The influential IHS Markit German purchasing managers' index for manufacturing hit a three-year high in January of 60.6, up from 57.1, while in France it was up 3.4 points to 55. However, for the services sector the index recorded nine and three-month lows of 45.9 points and 43.6 for Germany and France respectively, well below the 50 mark that separates growth from contraction. Economists warn the outlook for Germany's services sector looks flat for the medium term.
The UK is launching a $1.1 billion agency to back "high-risk, high-reward" scientific research and fuel the tech jobs of the future. The Advanced Research & Invention Agency (Aria)" is modeled on the American agency Arpa, which is credited with funding the development of the internet and GPS. Although the new group will have only a fraction of the budget of existing research bodies, Business Secretary Kwasi Kwarteng said the aim of Aria was to "drive forward the technologies of tomorrow" by "stripping back unnecessary red tape."
The Polish free-to-play casino app operator Huuuge has seen steady demand on its first day of trading on the Warsaw exchange. Shares were trading at around flotation price by mid morning, despite the firm becoming Poland's largest gaming industry listing on record when it floated at $445 million two weeks ago. Analysts say Poland is poised to become an incubator for gaming IPOs and has attracted a flurry of listings in recent months, including the video games developer People Can Fly.
Finland's Rovio Entertainment, the group behind the Angry Birds games franchise, has reported a smaller-than-expected profit in the fourth quarter and a modest increase to its dividend. Operating profits stood at $3.5 million for the three months to December but well behind the $13 million forecast in a poll of analysts, with cash from brand licensing and new players falling.
One of the UK's "Big Four" banks, Nat West has slim quarterly profit. The group made $89 million in fourth-quarter pre-tax profits, despite loss warnings and has confirmed it would retreat from the Republic of Ireland after more than a century in the country.
UK government borrowing hit $12.3 billion last month, the highest January figure since records began, showing the ongoing cost of continued pandemic support measures. It was the first time in a decade that more was borrowed in January than collected through tax and other income. January is generally considered a revenue-raising month in the UK as the self-employed submit tax self-assessment returns ahead of a deadline.
Meanwhile, UK retail sales fell sharply over the same period with many stores closed in the latest COVID-19 lockdown. Figures from the Office for National Statistics (ONS) show sales fell 8.2 per cent in January from the month before with clothing store sales particularly affected, despite the rise in the value of sterling in lockdown.
However, demand for top-of-the-range silk scarves and handbags, particularly in China, has propelled fourth-quarter sales at the French label Hermes. The maker of Birkin and Kelly bags posted year-on-year growth of 16 percent in the three months to December, ahead of analysts' expectations and far exceeding that of rival Gucci. Luxury goods firms have struggled in lockdown due to constraints on international travel by the world's rich, but online sales have made up some of the shortfall as people splash out in lockdown.
WATCH: Karen Scheffer arrived in the UK on February 15 and is quarantining at the Radisson Blu hotel for 11 nights at a cost of $2,426. "The only problem is that they have to give us food in takeaway boxes and to serve beautiful food in a takeaway box is not my idea of what cuisine should be like," she told CGTN Europe.
The European Union has unveiled its trade policy review, setting out global market priorities, and plans to develop international relationships. Brussels says it will encourage a stronger green agenda at the World Trade Organization and ensure the body sets rules for digital trade.
The EU also wants to enhance partnerships with countries such as China and the U.S., but says it will work vigorously to enforce global trading rules.
CGTN Europe spoke to David Henig, UK director of the European Centre for International Political Economy, about the changes ahead.
One of the big policies to come is what's called a "carbon border adjustment mechanism". And that is basically to say that imports should have to be considered in the same way as EU production in terms of the amount of carbon they emit or that they're responsible for, there should be some kind of mechanism for ensuring this at the border. It's pretty complicated. We're not quite sure how it's going to work, but it would be a big change in the way world trade works.
How do you think Europe's relationship is going to change with the U.S. under President Biden?
There's a lot more optimism around that President Biden will want to help get things moving in the WTO. There's a new director-general who has just come in to come into position and she'll be part of this as well. But there are no simple solutions to this. And I think what the trade strategy does, it sets out a lot of the world that we're now in. It brings it up to date and suggests what the EU would like to do. It would like to make the WTO a new source of rules for the world, updated in areas like climate change. But it's pretty short on knowing how exactly that is going to work when you have to get 164 countries to agree. And I think that is the drawback with a lot of this.
And finally Australian Prime Minister Scott Morrison has said he is in talks with other world leaders over a new "get tough" policy on making Facebook pay for content, saying: "We simply won't be intimidated".
Supporters of Australia's News Media and Digital Platforms Bill say it's needed to save Australia's homegrown news providers, at which advertising revenues have plummeted in recent years. By contrast, how much has Facebook's share of the market grown by? (Yes, that is billions!)