The Lex Newsletter: like and subscribe! 

Receive free Companies updates

We’ll send you a myFT Daily Digest email rounding up the latest Companies news every morning.

Dear reader, 

There is a particular kind of subscription fatigue that comes from being swamped by choice. What started with music and television has expanded to retailers such as salad chain Sweetgreen and ride-hailing company Uber. A few weeks ago, I discovered I’d accidentally been paying for both a US and a UK Amazon Prime subscription. That’s what happens when you take up too many introductory offers. 

Another type of subscription fatigue can come from the variety of tiers available to extract money from loyal users and hang on to the ones who might leave. This week, music and podcast streaming platform Spotify announced that it would create a new super-premium tier. Twitter is still trying to push monthly payments for both check marks and creator subscriptions. 

The Federal Trade Commission’s plan to sue Amazon for “tricking” customers into paying for subscriptions might result in other companies changing their sign-up and cancellation process. Lex would welcome that. But we’re still waiting for the real showdown between FTC chair Lina Khan and Amazon to begin.

With several investigations under way, it seems unlikely that Amazon will seize this moment to make another serious acquisition. Rumours that it might bid for Ocado lifted the latter’s share price by almost a third. But Lex thinks the lossmaking online grocery delivery company will need to shed its UK retail business before it becomes an appealing prospect. 

Rate spate

Antitrust enforcers at the US Department of Justice were talking a big game this week too. The DoJ is keen to scrutinise banking deals more closely. Lex asks: what banking deals? Since the financial crisis, the sector is well aware that regulators are not keen on the idea of consolidation. Deals that do happen take a long time to close. The US has a lot of commercial banks — about 4,000. The UK has fewer than 400. Streamlining is in order. 

Across markets, a broad lack of deals has left investment banks scratching around. Wall Street investment bank Lazard announced in April that it had cut about 10 per cent of its workforce. Then ADQ, a sovereign wealth fund of Abu Dhabi, appeared. Talks were held to take Lazard private. No deal came about but Lex thinks Lazard would benefit from saying goodbye to public markets — so long as its independence is not compromised. The market’s fixation on growth for growth’s sake does the bank no favours. 

Rising interest rates around the world should be a boon for bank profits. But banks in the UK are considering the risks that come from the Bank of England’s decision to raise its base rate to 5 per cent this week. NatWest, which has a relatively large share of variable-rate commercial loans, is particularly exposed. 

Homeowners with mortgages are facing a sharp increase in payments. In the US, 30-year loans are now 7 per cent. Naturally, home sales are down. But long-term under-investment in new housing means housebuilders have not followed them. Shares are near record levels. 

Splitsville 

Earlier this month, US venture capital firm Sequoia declared that it would split off its Chinese business amid deteriorating trade relations between the two countries. London-listed pharma company AstraZeneca may be next. The result could be a China business worth up to $22bn.

Lex thinks AstraZeneca’s plan to carve out the Chinese business would tidy up a situation that is only likely to get more complicated. Sales in China are no longer growing as quickly and close relations with Beijing are necessary for a comfortable existence. 

Flagging energy 

In both China and the US, renewable energy is turning into a repeat of the semiconductor fight, with subsidies pouring out to the sector. Will the UK get the same treatment? Labour leader Sir Keir Starmer wants to create a £2.5bn, five-year fund available to renewable energy companies and end the issuance of new oil and gas licences. Lex suspects those with permits already issued will press ahead with increased vigour. Backdating the plan could change that — but it does not seem to be part of the current proposal. 

Flying taxis — or eVTOLs as the sector prefers to call them — claim eco-friendly status. Creators say whizzing straight from one city to another in an electric plane will be less polluting than sitting in a traffic jam. But the lift required to get them into the air means they will consume more power than electric cars. They will also be noisier and potentially more dangerous.

Audit-iddly squat 

Finally, Lex extends its sympathies to junior auditors. It’s a stressful job with long hours and low pay in a sector that does not offer the prestige it once did. Oh, and the threat of artificial intelligence wiping out the entire industry at some unspecified point in the future.

While graduates weighed down with debt rethink their career choices, employers have decided that instead of raising pay they will simply broaden their intake pool. Many Lex readers made the comparison to junior doctors — another cohort that have seen their pay drop in real terms. The British Medical Association says that on a per-hour basis, newly qualified doctors earn £14.09. That’s less than they would earn if they worked at a high street coffee chain.

Other stuff I liked this week 

• Not a particularly fun read but an interesting one. Andrew Tate and the online alpha male movement use modern platforms to promote some very old ideas. 

• And a palate cleanser after that: Literary Hub’s 50 best summer novels. 

Enjoy your weekend,

Elaine Moore
Deputy head of Lex