Whether to allow a Vodafone/H3G merger is essentially a trade-off between range of consumer choice and costs of network duplication. With the need for the former diminishing and the latter increasing, the case for approval is strengthened.

H3G is in a negative spiral of small scale, low investment, and low returns. A merger would allow it to form part of a more credible competitor with a transformed returns profile—without rising prices or reduced industry investment levels.

The CMA’s aversion to mergers has been very stringent of late—an approach that risks deterring investment and compromising competitiveness. Consolidation in UK mobile is unlikely to happen without a change of mindset.

Amidst the US macro downturn denting online sales, Amazon reported revenue growth of 7.2%, driven by AWS and advertising, but broad-based in nature

Inelastic demand for Prime has created opportunities to increase efficiency and monetisation, with cutbacks to fulfillment costs and increased subscription fees boosting Amazon's margins

Amazon's bottom-funnel search advertising growth has proved resilient, up 18% YoY, as growth eludes higher-funnel competitors—offering a strong indication that Amazon will largely buck the trend of advertising decline

Amazon's first reported loss since 2015 is not surprising in a difficult inflationary environment, as ecommerce resets from the pandemic boost. Highly exposed to cost pressures through its logistics business, the situation is not as bad as it looks

The increases to Fulfilled by Amazon fees have been completely lost in the storm, while costs continue to increase on all sides. Amazon's announced increases are unlikely to keep up 

Launching Buy with Prime will allow Amazon to increasingly monetise FBA: a further step towards creating a monopoly in the fulfillment space while also boosting the desirability of Prime membership

The UK government is on the cusp of introducing legislation that will force online platforms to monitor and mitigate the presence and spread of harmful and illegal content, in a regulatory first for big tech.

Affected companies should take note: they will need to prepare for a higher level of transparency and communication with regulators, and larger service providers will require expanded moderation, user verification and research capabilities.

Users should be protected as platforms balance complex competing duties. News publisher content has a carveout, but publishers may experience butterfly effects as the online environment is reshaped.

Amazon has capitalised on the pandemic’s boost to ecommerce, reporting 67% global revenue growth from 2019 to 2021. While Shopify’s impressive trebling of B2B revenues was from a lower base, at 44% of Amazon’s Marketplace it is closing the (still huge) gap

Shopify appeals to brands around the world, leveraging the open internet to establish a direct-to-consumer (D2C) business, undermining Amazon’s position as the B2B ecommerce one-stop-shop in 17 markets

Shopify is not a direct platform competitor to Amazon, which boasts a captive audience of Prime members and fulfilment. Shopify’s expansion to fulfilment in North America is the first threat to Amazon’s grip

Sky’s performance across 2021 significantly improved, driven in Q4 by a nice c.5% growth rate in UK consumer revenues and the advertising rebound, but effects of the pandemic are still being felt with EBITDA down 30% on 2019.

The decline in Group revenue accelerated in Q4 due to the severe shock to the Italian operation from its loss of most premium football coverage, although we see upsides in a possible rights reshuffle.

In 2022, Sky can leverage growth vectors including bigger content bundles, Glass, advertising innovations and broadband. Consolidating SVOD and telecoms markets may be more favourable to price increases.

The UK net neutrality rules are up for review; as usual, the operators are pressuring for relaxation, and there are strong arguments that the competitiveness of UK telecoms markets make such rules innovation-quashing with no consumer benefit.

The chances of mainstream video content providers producing a windfall for telcos are slim, but there are a host of more intensely commercial content providers which have far greater potential to pay extra money for higher quality content delivery.

Future services such as virtual and augmented reality will stretch even FTTP/5G networks; allowing the telcos to develop custom business models to facilitate their delivery may well speed up the development and implementation of the metaverse in the UK.

Digital advertising in the UK has been a phenomenal success story, but a concentrated one, such that many online media companies have not found a sustainable model

User payments are growing, but are currently focused on large, expensive bundles: Spotify, Netflix, the New York Times. This implements a hard division between free and paid and limits the potential audience

Micropayments and microsubscriptions are alternative models which content owners in certain media can use to address more types of demand. Multiple obstacles remain but for many companies the need to experiment has become critical

21CF’s bid for 100% ownership of Sky has been referred for a Phase 2 investigation to the Competition and Markets Authority (CMA), which will decide by 6 March 2018

Third parties Avaaz and Ed Miliband MP complain of the influence of the Murdoch Family Trust (MFT) and family members over the UK’s news agenda and political process 

A remedy could insulate Sky News from this influence. The offer of a Sky News Editorial Board at Phase 1 was refused. Third parties will ensure the debate in Phase 2 is very lively

Across Europe, markets are becoming more competitive. Incumbent pay-TV paltforms (e.g. Sky or Canal+) face increasing threats from both internet-based services (e.g. Netflix and Amazon), and telecoms operators

Telecoms providers are proving the most potent challengers as they enter the premium football rights market to create attractive triple and quad play bundles – examples include BT, SFR and Telefónica. The latter is now the main pay-TV operator in Spain whereas France’s Canal+ has entered into a strategic alliance with Orange

Across the top five markets (UK, France, Germany, Spain, and Italy), Sky remains the leading operator with an estimated 21.5m video subscribers, twice as many as Netflix