Screenshot: Will workers’ rights put a puncture in Deliveroo’s IPO?
This week
**Media Moment of the Week: Farewell to the real McCoy
**Will workers’ rights put a puncture in Deliveroo’s IPO?
**A watchdog bares its teeth
Media Moment of the Week: Farewell to the real McCoy
In a shock bit of transfer news this week, BBC presenter Simon McCoy announced he was leaving the Beeb to join GB News (undoubtedly the biggest shock signing for Andrew Neil’s new venture so far).
McCoy is a veteran broadcaster, joining Sky News in its early days before setting up shop at the BBC in 2004. To viewers, though, he is best known for littering his bulletins with puns, witty asides and withering put-downs (not to mention the iconic photocopier paper incident). Luckily for us, the BBC has put together a compilation of his top viral moments.
Will worker’s rights put a puncture in Deliveroo’s IPO?
For some months now, the City has been drooling over Deliveroo’s blockbuster stock market float. The initial public offering, which could value the company at almost £9bn, is likely to be London’s largest this year, is a much-needed major tech float for the city and has been hailed as a signal of the Square Mile’s prowess after Brexit.
Yet, almost overnight, doubts have been cast over the debut after a number of major investors (Aberdeen Standard, Aviva Investors, BMO Global and L&G, among others) announced they will not be participating, citing — at least in part — concerns about the firm’s treatment of workers.
It comes after figures compiled by the Bureau of Investigative Journalism showed a third of the firm’s delivery drivers, who are self-employed, made less than the national minimum wage, with some earning as little as £2 per hour. The unimpressed investors described the working conditions as a “ticking bomb”, and pointed to the growing consideration for environmental, social and governance issues (though it’s funny how these concerns are only now surfacing).
In truth, the more pressing worry for avaricious City funds relates to last month’s Supreme Court decision against Uber, and the domino effect that is now threatening the wider gig economy. Deliveroo riders are not classed as workers, meaning they are not entitled to a minimum wage, holiday or sick pay. Following the Uber decision, which forced the ride-hailing firm to class its drivers (though, interestingly, not its food couriers) as workers, a similar legal challenge against Deliveroo is a real possibility.
The company is already facing action in a number of markets, while the EU has launched a consultation into the issue. Last year Deliveroo ramped up its provisions for legal costs to more than £112m, while in its IPO prospectus earlier this week the company warned investors that a change to the status of its workers would incur “significant additional expenses”, or even threaten its existence entirely.
It’s unlikely that founder Will Shu, who stands to pocket around £500m from the float, will be overly worried in the short term. Deliveroo already has a number of major investors on board and won’t struggle to find more. A spokesperson says riders have the “freedom to choose when and where to work”, adding that the firm has confidence in its business model. Nevertheless, the saga may just sow more seeds of doubt around the longer-term viability of the food delivery favourite.
For some investors, Deliveroo’s punchy price range was already a cause for concern. Analyst Neil Wilson says investors should “always be careful” about highly-priced tech platform IPOs, particularly if they look like pricing at the top of the range, as it “doesn’t leave a lot of headroom”.
Moreover, while Deliveroo has been a clear winner during Covid, it is still operating at a loss. Given the firm failed to serve up a profit against the ideal backdrop of a pandemic, more sceptical investors may be wondering if it ever will. Stir in with this the very real threat of a legal challenge that would wear down already wafer-thin margins and the future starts to look a lot less rosy for Deliveroo.
The competition watchdog bares its teeth
Being a regulator is never a glamorous job but, for the Competition and Markets Authority at least, things are getting a little more exciting.
In the wake of Brexit the CMA is redefining itself on a global stage, taking on some of the powers that would previously have fallen to the European Commission. It hasn’t hesitated to capitalise on this newfound freedom, wresting responsibility for the O2-Virgin Media merger investigation away from its counterparts at the EU last year. The watchdog is also set to oversee the government’s new Digital Markets Unit, which is aimed at taking on Big Tech.
For boss Andrea Coscelli it’s a golden opportunity, and he’s ramped up the war of words against Silicon Valley, threatening to clip the wings of titans such as Facebook and Google. It’s not just rhetoric, either. So far this year the CMA has opened probes into Google’s decision to remove third-party cookies and Apple’s app store dominance. This week alone it derailed the £140m merger between Crowdcube and Seedrs and flagged concerns with Facebook’s takeover of Giphy. Now, it is reportedly preparing a sweeping investigation into Facebook control over the social media and online advertising markets.
This flurry of activity has, perhaps, been spurred on by scathing comments from its former chairman Lord Tyrie. In an explosive letter, published in the Financial Times, Tyrie said the regulator was not fit for purpose, pointing to its lack of public profile and accusing it of failing to prioritise consumers.
But if there was ever a time to prove the doubters wrong, it is surely now. With the wave of public opinion turning against Big Tech, and a raft of new powers under its belt, expect to hear a lot more from the CMA this year.
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- UK record label revenue grew this year thanks largely to streaming, which offset the decline in live shows. It comes amid a parliamentary inquiry into how streaming royalties are split between artists, labels and platforms.
- It was good news for Bloomsbury, which this week hiked its profit forecasts for the second time. The publisher, best known for the Harry Potter books, has cashed in on a reading boom during lockdown.
- The government will have to rely on the BBC licence fee model until for the foreseeable future due to its failure to find a viable alternative. That’s according to the DCMS committee, which published the findings of its report into public service broadcasting this week.
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