Zuckerberg in Europe, EU stand on industrial data, Alphabet (GOOGL - Free Report) -owned Google’s talks with publishers, YouTube dumping App Store and other stories are detailed below:
Zuckerberg In Europe
Facebook’s (FB - Free Report) Mark Zuckerberg is in Europe to meet with regulators about the many issues they have with the way Facebook operates, the level of security and privacy it offers users, and its low tax bill. Primary on regulators’ minds this time round is taxation, as it’s one of the things the 20 biggest economies (G20) is set to discuss at the Organisation for Economic Cooperation and Development (OECD) meeting slated for Feb. 22-23 in Riyadh.
"We need to give the highest priority to finding global solutions to address the taxation of the digital economy and the remaining Base Erosion and Profit Shifting issues," said a document representing the position taken by all EU members of the G20 and Britain. "We look forward to ambitious, fair, effective, non-discriminatory and workable global solutions and will redouble our efforts towards a consensus-based solution to deliver this global goal in 2020."
Facebook, which claims to have paid all taxes due, paid around 28.5 million pounds in corporation tax in 2018 on revenue of $1.65 billion in Britain, according to media reports.
But Zuckerberg, addressing a Munich gathering, said that he welcomes regulation, especially with respect to elections, harmful content, privacy and data portability. He’s also willing to let Facebook pay more taxes, now that some EU states have said that they’ll go ahead and levy separate taxes until there’s a global consensus on the system of taxing digital giants:
"I understand that there's frustration about how tech companies are taxed in Europe. We also want tax reform and I’m glad the OECD is looking at this".
"We want the OECD process to succeed so that we have a stable and reliable system going forward. And we accept that may mean we have to pay more tax and pay it in different places under a new framework."
EU Will Take Control of Its Industrial Data
The European Union is getting ready to bring new data rules that will help it harvest, manage, analyze and take control of its industrial data and related artificial intelligence.
While regulators agree that the personal data segment is out of their hands with the U.S. (Google, Facebook. Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , etc) and China (Huawei, Baidu (BIDU - Free Report) , etc) taking control, there is a consensus that "Europe is the world's top industrial continent. The United States have lost much of their industrial know-how in the last phase of globalization. They have to gradually rebuild it. China has added-value handicaps it is correcting," so says EU Internal Market Commissioner and former French finance minister Thierry Breton. "We're entering a new phase. The battle for industrial data starts now, and the main battlefield will be Europe," he said.
So the top priorities for the EU that they will address with the new rules are how to contain international players (eg. with legislation for gate-keeping platforms, preventing unilateral determination of access rules by large online platforms) and how to promote local players (eg. with incentives for data sharing among locals, creation of free pools of geospatial, environmental, meteorological, statistical and corporate data to boost innovation, scrapping competition rules that get in the way, cross-border data use, data interoperability). Local expertise/innovation in areas like, robotics, machinery, healthcare, payments, transport, energy and certain B2B transactional are in particular focus. Additionally, it will also address environmental considerations like achieving carbon neutrality and new tech like facial recognition technology before it becomes all-pervasive.
The rules will be presented on Wednesday, followed by a 12-week period for public comment before a formal proposal is prepared and presented by year-end.
The EU’s actions on this front will have consequences far beyond its borders, as other countries are likely to adopt similar rules to protect local businesses and control international giants.
Google May Pay Publishers For Content
The Wall Street Journal reports that Google is in the early stages of a deal with select content providers for a paid News product. Most of these publishers are based in Europe, where, in the past few years, Google has seen growing animosity amongst partners, regulators and some users. But this is a route that other U.S. technology companies like Facebook and Apple have also adopted, as they seek to pacify European publishers and regulators. Google's Vice President of News has agreed that the company is looking to expand its ongoing work with publishers.
Publishers have been complaining for some time that Google, in its position as news aggregator, is also a consumer of content by virtue of the snippets it displays on the search engine results page. So when a user clicks on a story, they are directed to the publisher’s site. But we don’t always have to click on a link for a tidbit of information at any given time. Google initially took a hard stand, saying that it wouldn’t display those snippets, but publishers found that there was a sharp drop in click rates as a result. So they came back but never reconciled with the fact.
YouTube Dumps Apple App Store
It’s not exactly parting ways. But subscriptions, of which Apple takes a 30% cut, which drops off to 15% after a year, is no longer an option. It was always a hefty tag for payments processing, and Apple has faced (and continues to face) litigation from developers, which refer to the fees as Apple tax. Some of the better-known services like Netflix (NFLX - Free Report) and Spotify (SPOT - Free Report) are already doing their subscriptions from their own properties. Apple maintains that the fees are justified to ensure a safe marketplace. For Google, it’s an important step as YouTube grows into a more significant contributor to its results.
Amazon Trims Delivery Partners
Amazon is having certain issues with last mile delivery. So now that its busy selling season is over, the company has decided it doesn’t need many of the small delivery outfits it incentivized back in 2018 to lease vans and hire drivers to do this job. Turns out, Amazon was paying below-market rates, so these small delivery companies couldn’t maintain its standards of safety and working conditions. Third-party market watchers also started commenting on these practices. So now, Amazon has said that it doesn’t need these middlemen any more and that it can help the drivers find alternative employment, including at Amazon.
Companies that have been badly affected per government records include Illinois-based Bear Down Logistics (which must fire 400 drivers), Washington-based Delivery Force (272 drivers) and Kansas-based RCX Logistics (600).
More than 800 delivery businesses employing 75,000 drivers were part of Amazon’s 2018 endeavor.
India Online Tax
India is trying to extend the income tax net over medium-sized sellers, generating more than half a million rupees a year that are somehow managing to slip through the cracks. So it is bringing a tax-deduction-at-source (TDS) scheme to this group. However, the scheme applies only to third-party sellers on online marketplaces like Amazon and Walmart’s Flipkart that would be responsible for collection of the tax and deposition into the government account.
So all these sellers and online marketplaces are protesting and lobbying Chambers of Commerce to protest on their behalf.
The Federation of Indian Chambers of Commerce and Industry (FICCI) for instance said in a statement seen by Reuters: "(It) would cause irreparable loss to the entire industry with increased compliance burden…This will also lead to reduced trading activity."
The U.S.-India Strategic Partnership Forum (USISPF) wants more time; they’d like it to come into force in April 2021 or later.
"Eventually, if you're a taxpayer, that's going to be offset," Finance Minister Nirmala Sitharaman said. "Why should every TDS be seen as additional tax?" Of course, India’s income tax department is notoriously lazy and corrupt. If the income tax department owes you money, they can return it years later, or never, especially if you’re an individual. So it’s easy to see where the concern is coming from.
Retail industry executives expressed this concern while pointing to another. They want the tax to be calculated on the sale value net of the nationwide goods and services tax.
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