Daily Archives: October 11, 2021

Critics say the tech industry is having a "Big Tobacco moment," but limiting harms caused by giant tech firms is likely to prove even trickier than reducing the toll of smoking.

One key difference is that Big Tobacco was a relatively stationary target, with the big companies all producing roughly the same product and doing so year after year.

By contrast, products from Apple, Google, Facebook, Amazon and others differ widely from one another, as do the perceived harms. Meanwhile, the companies and their industry are all rapidly moving targets.

Driving the news: Salesforce CEO Marc Benioff has been comparing Facebook to the cigarette companies for quite a while.

The big picture: There are clear parallels, including companies hiding and then downplaying internal research warning of their products' harms.

The risk for would-be regulators is that much of today's discussion in their circles is focused on social media platforms that are in a constant state of turnover.

Of note: An analysis by Blair Levin of New Street Research points out that litigation drove the campaign against tobacco.

What to watch: Legislators and regulators will have to find consensus not just on which companies are causing problems, but also on what exactly the harms are and how to reduce them.

The bottom line: Despite "Big Tobacco moments" and ensuing regulation and restriction, tobacco smoking still causes 480,000 U.S. deaths each year, per the FDA.

Link:

Why Big Tech is harder to rein in than tobacco - Axios

In recent years, big tech companies have been pivoting into different industries. By applying their knowledge of emerging tech, theyve been able to disrupt and overtake established players in the market. And with the emergence of open banking, theyve now turned their sights on the finance industry.

Google Pay will soon let Citibank customers (and nine other banks) manage accounts directly from the app. Apple launched the Apple Card, its own credit card issued by Goldman Sachs. Amazon now offers up to $1M in loans to small businesses. Meanwhile, Facebook plans to launch its own digital currency Diem (formerly Libra) in the US.

Big banks need to innovate rapidly to compete with these emerging players who can offer new digital services to customers. However, while tech giants definitely have some key advantages over traditional banks more development power, better equipped for innovation, and massive user bases banks do hold an important card: customer trust.

With life as we previously knew it being disrupted during the pandemic, many organizations have had to rethink their processes and operations to survive and emerge stronger in the new digital era. Values in society and business have shifted, and one of the most prominent attributes talked about today is the importance of trust. Consumers are more risk averse, with a heightened sense of which organizations they can trust and rely on.

In recent years, big tech, and particularly Google, Facebook, and Amazon, have faced criticism and a slew of investigations over the harvesting of users personal data. From the Cambridge Analytica scandal to Siri and Alexas very unwelcome eavesdropping, more and more consumers are thinking twice about giving up their personal data in exchange for the companies services.

Another issue is security. Big techs track record with data breaches, both external and internal, have been called into question. Most recently, the data of 533 million Facebook users was posted in a low level hacking forum, meanwhile a number of Amazon employees were fired after leaking customer emails and phone numbers.

According to a report by Ponemon on privacy and security, 86% of adults said they were concerned about how companies like Facebook and Google use their personal data. At the end of the day, while these companies may offer different services to consumers from search engines to online marketplaces, their real revenue comes from advertising, which means data is gold.

The question is, with big techs move towards banking, will consumers be willing to trust them with their financial data?

All this means that banks could compete with big tech if they maximize on that trust gap. But tech innovation remains a significant hurdle.

Differing from big tech, banks based on centuries of experience have been built for privacy and security. As Berno Snijder, Lead Identity & Access Management atABN AMRO explained, from multi-factor authentication and audit trails to secure processes, banks have multiple layers of defence before you can access the data.

As Snijdersays, regardless of whats happening around us, people still trust banks today. Its a safe haven. When you ask people who they trust more with their data, they would still choose the bank as being the safest.

But this heritageis also their disadvantage in the race against big tech players.

Banks have been hesitant to adopt certain technologies, as the question around trust and privacy is brought to the forefront. If a bank decides to use a cloud solution, for example, to enable a more efficient and seamless product offering to their customers, they need to consider their responsibility and accountability for the data added to that platform.

Snijder admits that banks have beenreluctant to adopt certain external solutions:

Its the not-invented-here syndrome. Banks traditionally only trust the solutions that they build, manage and control themselves. This has two disadvantages. Firstly, theyre very expensive, and secondly, theyre not always customer friendly.

The biggest challenges facing banks today are slow growth, profitability, and digital adoption along with strict regulations. Outdated systems and processes may mean these institutions could fall behind financial big tech.

The question is how can we manage that? I think the biggest puzzle we have to solve is how to collaboratewith big tech companies we cannot survive just ignoring them or trying to compete with them. You have to find a way to work with them, as a partner, as a competitor, and as an enabler. And the biggest beneficiaries should always be the customer, says Snijder.

With the customer experience being a major factor, banks need to embrace the new technological challenge to improve, upgrade, and transform their processes and systems, and build on the digital innovation they lack. At ABN AMRO, this is seen through new partnerships being built with fintech start-ups, academics, and hackers, as well as through their Innovation Lab and introduction of AI, IoT, and blockchain.

Through its Digital Impact Fund, ABN AMRO partners with up and coming fintechs. This allows the bank to stay up to speed with the rapid pace of tech innovation and offer cutting edge products to customers, while providing fintechs with much needed funding.

For example, their partnership with Swedish startup Tink resulted in a personal finance management app called Grip. Meanwhile, their partnership with BehavioSec gives them access to the latest cyber-security technologies.

Designed to explore new ideas and opportunities for technology, society, and the product offering, the Innovation Lab is a prime example of how banks are transforming into modern businesses with an entrepreneurial mindset. Snijder explains,

New technologies like biometrics, the smart coffee machine, or identifying fraudulent transactions using Artificial Intelligence, bring new opportunities (and challenges) which are worth exploring to see if they can improve customer experience.

Developing customer trust is not simply about adopting the latest technology. Its about using it to address wider trends and demands in society in line with consumer expectations. This is what will differentiate and ensure the continued success of traditional banks.

To really build trust, Snijder tells us:

We have to accept the trust experience is different for every individual. This means we have to put the customer experience in the centre of our service offerings, in line with our responsibility to make sure banking is available for everyone. There is a complete transformation from being a money-driven to a society-driven organization.

For example, during the pandemic, the bank quickly developed user-friendly personalized communication methods: an omnichannel customer experience that offers the option of video communication for customers, as well as an online platform that can be accessed via biometric authentication or a password, depending on each customers preference.

With these options, any customer, regardless of age or whether they are tech savvy, is able to continue banking in the way they feel comfortable with. Snijder tells us, there is no one solution that fits all, we need to provide flexibility to the customer so they can choose what they want within the boundaries that we set. Its a paradigm shift. Listening and adhering to the customers needs nurtures the existing trust they have.

Supporting customers financially and evolving their offering along with societal changes will be imperative to ensuring the future of the traditional banks success in a digitally evolving world.

Originally posted here:

Banks can compete with big tech by exploiting the trust gap - The Next Web

Around the world, governments are challenging the immense power of Big Tech, causing politically motivated showdowns between their officials and tech companies to become increasingly commonplace.

In mid-September, just as voting began in Russias parliamentary elections, Apple and Google capitulated to ongoing government demands to remove from their online stores a smartphone app created by allies of opposition leader Alexei Navalny. To channel support away from the Kremlins preferred candidate, the app improved strategic coordination among voters and advised them about which candidates were most likely to defeat those backed by the ruling party.

The companies alarming decision fits a larger, global pattern. Governments around the world are increasingly wielding their regulatory power to subdue free expression online and gain greater access to private information. To respond to the immense power of the tech industry without emboldening digital repression by the state, regulations must make human rights and democratic values a priority.

The use of regulation for political ends was on full display in Russia, as state authorities coerced the two California-based tech titans into censorship amid tightly controlled elections, limiting the ability of opponents of Vladimir Putins government to organize.

Set against the backdrop of an 11-year decline in global internet freedom and a 15-year decline in overall democratic rights worldwide as identified in Freedom Houses research the question of how much and what kind of regulatory power governments should have over technology companies is both urgent and delicate.

In a recently released Freedom House report on internet freedom, we found that 48 of 70 countries surveyed pursued at least one form of regulatory action on online content, personal data or competition against technology firms over the last year. More than a dozen new laws threaten the future of free expression online. More governments are pressuring companies to remove broad swaths of content, often under the pretext of protecting users from misinformation, incitement to hatred or material that is harmful to minors. Their true aim is to suppress anti-government speech, investigative reporting and expressions of LGBTQ+ identity and other posts that may be politically disfavored.

Some government leaders have taken the opposite tack and attempted to ban platforms from moderating content, which could allow for the proliferation of false or hateful propaganda and threats of violence to drown out authentic discussion and debate. Only in a few cases do laws require companies to be more transparent over their content moderation, advertising practices and use of algorithms, and provide content producers with an avenue for appeal when their content is restricted.

Dozens of laws introduced to regulate corporate data management are also ripe for government exploitation. Many require companies to undermine end-to-end encryption a security method that prevents data from being accessed by anyone other than sender and recipient in their products, or mandate that user data be stored on servers located within the country. In practice, weakened encryption and domestic data storage expand government ability to access peoples most intimate information. Even laws that ostensibly enshrine the rights of users to control their data often contain vague surveillance exemptions for national security.

More positively, industry regulators around the globe have also displayed a zeal for cracking down on anti-competitive and abusive commercial practices, and for fining major tech firms for failing to protect data and exploiting their market power. A few countries, such as Germany, have introduced measures that would prohibit companies from denying interoperability and data portability.

But competition policy also can be crafted and used for political gain. For instance, Chinese regulators have been among the most aggressive in addressing monopolistic practices by the countrys tech giants. However, their interventions such as forced company restructurings and politicized pressure on business leaders have raised concerns that the government is more interested in reining in these companies autonomy and influence than in fair competition and consumer protection.

The global drive to control Big Tech is occurring in tandem with a historic crackdown on internet freedom. In 56 of the countries covered by our report, officials arrested or convicted people for their online speech over the last year.

Governments suspended internet access in at least 20 countries, and 21 others blocked access to social media platforms, most often during times of political turmoil such as protests and elections. Authorities in at least 45 countries are suspected of obtaining spyware or data-extraction technology from private vendors, giving themselves unprecedented, extrajudicial access to private communications.

Some of the most illustrative cases of digital repression in the last year occurred in Myanmar, Belarus and Uganda, where electoral disputes led officials to shut off internet service, censor social media platforms and independent digital news outlets, and physically assault internet users.

With so many aspects of our lives moving online, new internet regulations are likely to have a lasting impact on our ability to express ourselves freely, share information across borders and hold the powerful to account.

We need to ensure that regulation does not become a tool for governments around the world to exert greater control over the digital sphere. Advocates for a free and open internet including those from governments, civil society and the private sector should push for new laws that prevent power from accumulating in the hands of a few dominant players, whether in the private sector or the state. That means making free expression a priority in content moderation and requiring platforms to be far more transparent and accountable when they do remove speech.

Data privacy laws should provide users with control over their information, institute safeguards against government surveillance and protect encryption. And policies that govern competition should foster innovation to allow people to make informed decisions about their online experiences.

Regulation is not a panacea, but well-designed rules and incentives can ensure the internet retains its emancipatory power, with all its potential to drive personal and societal progress.

Adrian Shahbaz is director for technology and democracy at Freedom House. Allie Funk is senior research analyst for technology and democracy at Freedom House. They are co-authors of Freedom on the Net 2021: The Global Drive to Control Big Tech.

Excerpt from:

Second Opinion: How governments are coming for Big Tech - Los Angeles Times

Through her leaks and Congressional testimony, Frances Haugen, the Facebook Whistleblower, revealed a lot about Facebook's operation. Many of these revelations are things we've long suspected but now have proof of: Facebook focuses on growthof users and time spent on its platformsto the exclusion of everything else. For Facebook, growth trumps all, even the health and safety of its most vulnerable users.

In her testimony, Haugen explained that at Facebook, metrics are king. Facebooks growth division works to increase "user engagement," and it succeeds. This is a circular process: Facebook identifies content that users "engage" with and promotes it, leading to more engagement. Facebook's automated systems don't evaluate what is being engaged with they just identify and rank materials by engagement itself. So, according to Haugen, the automated scoring system will rank successful bullying as "engaging" alongside anything else that garners a lot of attention. Politicians who make extreme statements get more engagement, and are therefore ranked higher by Facebook, and are therefore seen by more Facebook users.

Its not like Facebook could discriminate between good and bad content even if it wanted to. Haugen says the "AI" Facebook uses to evaluate content is bad at posts in English and worse at posts in other languages. Facebook focused on scale over safety and chooses profit over safety.

These aren't mere prioritiesthey are reflected in the incentives Facebook offers to its engineers, designers and product managers, whose bonuses are tied to the quantity of meaningful social interactions (AKA "engagement") their products generate.

Whats more, Facebook isn't content to milk its existing, aging user base for "engagement." Facebooks on again/off again plan for an "Instagram for kids" is a bid to grow its users by habituating people to its products at an early age, normalizing this kind of engagement-maximization as an intrinsic element of social interactions, including on play-dates. Haugen doesnt believe Facebooks "pausing" of this plan is permanent. She believes theyre just waiting for the heat to die down.

For Facebook, the heat never dies down. The company is always in the middle of one spectacular scandal or another. Haugens testimony confirms what we long suspected Facebook's neverending crises are the result of a rotten corporate culture and awful priorities.

Ms. Haugen told Congress that she thinks Facebook should be reformed, not broken up. But Facebooks broken system is fueled by a growth-at-any-cost model. The number of Facebook users and the increasing depth of the data it gathers about them is its biggest selling point. In other words, Facebooks badness is inextricably tied to its bigness.

EFFs position is that if when a companys badness is inseparable from its bigness, it's time to consider breaking that company up.

EFFs position is that if when a companys badness is inseparable from its bigness, it's time to consider breaking that company up.

Much of this latest Facebook controversy concerns Instagram adsspecifically, which ads it shows to young people, and what effect these have on their mental health.

Remember, though: Facebook didnt build Instagram. It bought it, explicitly to neutralize a competitor. That raises the question of whether that merger should have been permitted in the first place, and whether it should be unwound today.

Facebook bought Instagram because it was a threat. Instagram was growing, by attracting the younger users who were leaving Facebook. Facebook's research showed that young users viewed it as a service for older people. Facebook's dwindling attractiveness caused friction after the company's merger with Instagram, as Facebookers seethed with jealousy of their Instagram colleagues. Facebook's corporate suspicion of Instagram eventually forced Instagram's founders out of the company, leaving everything about Instagram up to Facebook. Facebooks focus on engagement, its insularity, its need to pull all services under the umbrella of the core Facebook appall of that is rooted in its growth-at-any-cost mentality.

For most companies, the goal is to maximize profit. Without meaningful checks, that impulse can run amok, leading to unethical, abusive and, eventually, illegal conduct. The Facebook story, with its repeat offenses despite record fines, consent decrees, and market forces show that these simply do not do the trick.

By establishing breakups as a serious possibility that companies must consider, we can discipline them, so that they police themselves better, and we can open up space for more creative regulatory solutions. And if that doesn't succeed, we can break them up, creating more competition that will discipline their behavior.

Breakups aren't and never will be the first line of defense for every problem with tech. They can be complicated and expensive, and history has shown that when a breakup is not followed by enforcement, a monopolys splintered parts can simply reconstitute themselves. The 1984 breakup of AT&T was the result of nearly two decades of work by the Department of Justice, and it led to a radical diversification of the market. But in the two decades that followed, lax merger review and deregulation allowed the telecom market to concentrate into just a handful of big players once again.

We can and should pursue multiple strategies that will get us to a place where we dont have to worry every morning about what Facebook is doing to us today.

Breakups are a powerful tool. For breakups to be effective, we also need other tools, tooa whole toolbox full of ways to keep companies broken up and ensure a healthy supply of innovative competitors. That means enhancing merger reviews, removing barriers to interoperability, and well-crafted privacy laws to protect consumers and level the playing field.

Continue reading here:

What the Facebook Whistleblower Tells Us About Big Tech - EFF

Perhaps the best chance of a crackdown on the industry is if President Biden and his administration act forcefully. He has not yet put his weight behind any bills, but has placed some of the industrys leading critics in top regulatory jobs. Lina Khan, the chair of the F.T.C., and Jonathan Kanter, the nominee to run the Justice Departments antitrust division, have promised to hobble the power of the companies.

Facebook took a big hit this week, but they are capable of taking many hits just as the tobacco industry was, said Allan Brandt, a professor at Harvard and an expert on the rise and decline of the tobacco industry.

It took more than 50 years from the first published research about the dangers of cigarettes, and more than a decade after a whistle-blower shared internal documents proving that the tobacco companies hid its knowledge of the ills of their products, before there was meaningful government regulation, he said.

There will be regulation for Facebook and other tech companies, Mr. Brandt said, but Im skeptical of a route to successful regulation anytime soon.

The European Union has for years been more aggressive against the tech companies than the United States, on issues including antitrust and data privacy. This past weeks testimony from the Facebook whistle-blower, Frances Haugen, intensified calls to adopt proposals that would impose tougher rules for how Facebook and other internet companies police their platforms, and add stricter competition rules in an effort to diminish their dominance over the digital economy. The laws could be adopted as early as next year.

But in Washington, a key impediment to legislation is that Democrats and Republicans view the issues of tech power and speech on social media differently. Democrats want to address the spread of misinformation and the amplification of harmful political rhetoric, while Republicans argue that Facebook, Google, Twitter and other social media platforms censor conservative views.

And when it comes to questions about whether to break up the companies, many Democrats see antitrust action as a way to slow the most powerful tech platforms and address data privacy, security and misinformation. Some Republicans say that there is plenty of competition in the industry, and that breaking up the companies would be an example of government overreach.

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Lawmakers See Path to Rein In Tech, but It Isnt Smooth - The New York Times

Demonstrators protesting the military takeover of Myanmar flash the three-fingered symbol of resistance in Yangon, Myanmar, on April 4. Electoral disputes have led officials to shut off internet service, censor social media platforms and digital news outlets, and physically assault internet users. (Associated Press)

Around the world, governments are challenging the immense power of Big Tech, causing politically motivated showdowns between their officials and tech companies to become increasingly commonplace.

In mid-September, just as voting began in Russias parliamentary elections, Apple and Google capitulated to ongoing government demands to remove from their online stores a smartphone app created by allies of opposition leader Alexei Navalny. To channel support away from the Kremlins preferred candidate, the app improved strategic coordination among voters and advised them about which candidates were most likely to defeat those backed by the ruling party.

The companies alarming decision fits a larger, global pattern. Governments around the world are increasingly wielding their regulatory power to subdue free expression online and gain greater access to private information. To respond to the immense power of the tech industry without emboldening digital repression by the state, regulations must make human rights and democratic values a priority.

The use of regulation for political ends was on full display in Russia, as state authorities coerced the two California-based tech titans into censorship amid tightly controlled elections, limiting the ability of opponents of Vladimir Putins government to organize.

Set against the backdrop of an 11-year decline in global internet freedom and a 15-year decline in overall democratic rights worldwide as identified in Freedom Houses research the question of how much and what kind of regulatory power governments should have over technology companies is both urgent and delicate.

In a recently released Freedom House report on internet freedom, we found that 48 of 70 countries surveyed pursued at least one form of regulatory action on online content, personal data or competition against technology firms over the last year. More than a dozen new laws threaten the future of free expression online. More governments are pressuring companies to remove broad swaths of content, often under the pretext of protecting users from misinformation, incitement to hatred or material that is harmful to minors. Their true aim is to suppress anti-government speech, investigative reporting and expressions of LGBTQ+ identity and other posts that may be politically disfavored.

Story continues

Some government leaders have taken the opposite tack and attempted to ban platforms from moderating content, which could allow for the proliferation of false or hateful propaganda and threats of violence to drown out authentic discussion and debate. Only in a few cases do laws require companies to be more transparent over their content moderation, advertising practices and use of algorithms, and provide content producers with an avenue for appeal when their content is restricted.

Dozens of laws introduced to regulate corporate data management are also ripe for government exploitation. Many require companies to undermine end-to-end encryption a security method that prevents data from being accessed by anyone other than sender and recipient in their products, or mandate that user data be stored on servers located within the country. In practice, weakened encryption and domestic data storage expand government ability to access peoples most intimate information. Even laws that ostensibly enshrine the rights of users to control their data often contain vague surveillance exemptions for national security.

More positively, industry regulators around the globe have also displayed a zeal for cracking down on anti-competitive and abusive commercial practices, and for fining major tech firms for failing to protect data and exploiting their market power. A few countries, such as Germany, have introduced measures that would prohibit companies from denying interoperability and data portability.

But competition policy also can be crafted and used for political gain. For instance, Chinese regulators have been among the most aggressive in addressing monopolistic practices by the countrys tech giants. However, their interventions such as forced company restructurings and politicized pressure on business leaders have raised concerns that the government is more interested in reining in these companies autonomy and influence than in fair competition and consumer protection.

The global drive to control Big Tech is occurring in tandem with a historic crackdown on internet freedom. In 56 of the countries covered by our report, officials arrested or convicted people for their online speech over the last year.

Governments suspended internet access in at least 20 countries, and 21 others blocked access to social media platforms, most often during times of political turmoil such as protests and elections. Authorities in at least 45 countries are suspected of obtaining spyware or data-extraction technology from private vendors, giving themselves unprecedented, extrajudicial access to private communications.

Some of the most illustrative cases of digital repression in the last year occurred in Myanmar, Belarus and Uganda, where electoral disputes led officials to shut off internet service, censor social media platforms and independent digital news outlets, and physically assault internet users.

With so many aspects of our lives moving online, new internet regulations are likely to have a lasting impact on our ability to express ourselves freely, share information across borders and hold the powerful to account.

We need to ensure that regulation does not become a tool for governments around the world to exert greater control over the digital sphere. Advocates for a free and open internet including those from governments, civil society and the private sector should push for new laws that prevent power from accumulating in the hands of a few dominant players, whether in the private sector or the state. That means making free expression a priority in content moderation and requiring platforms to be far more transparent and accountable when they do remove speech.

Data privacy laws should provide users with control over their information, institute safeguards against government surveillance and protect encryption. And policies that govern competition should foster innovation to allow people to make informed decisions about their online experiences.

Regulation is not a panacea, but well-designed rules and incentives can ensure the internet retains its emancipatory power, with all its potential to drive personal and societal progress.

Adrian Shahbaz is director for technology and democracy at Freedom House. Allie Funk is senior research analyst for technology and democracy at Freedom House. They are co-authors of Freedom on the Net 2021: The Global Drive to Control Big Tech.

This story originally appeared in Los Angeles Times.

Continued here:

Second Opinion: Governments are coming for big tech. Here's what it could mean for your rights online - Yahoo News

A majority of the worlds nations have signed a historic pact that could force multinational companies to pay their fair share of tax in markets where they operate and earn profits. One hundred and thirty-six countries, including India, agreed Friday to enforce a minimum corporate tax rate of 15%, and an equitable system of taxing profits of big companies in markets where they are earned. Kenya, Nigeria, Pakistan and Sri Lanka have not yet joined the deal.

The move is part of an evolving consensus that big multinationals are funnelling profits through low-tax jurisdictions to avoid paying taxes. The Organisation for Economic Cooperation and Development (OECD), comprising mostly developed economies, has led talks on a minimum corporate tax rate for a decade. A multilateral convention is to be signed next year.

The biggest impact is likely on Big Tech companies that have largely chosen low-tax jurisdictions to headquarter their operations.

What are the decisions taken?

The decisions effectively ratify the OECDs two-pillar package that aims to ensure that large multinational enterprises (MNEs) pay tax where they operate and earn profits.

The 15% floor under the corporate tax will come in from 2023, provided all countries move such legislation. This will cover firms with global sales above 20 billion Euros ($23 billion) and profit margins above 10%. A quarter of any profits above 10% is proposed to be reallocated to the countries where they were earned, and taxed there.

The move follows an earlier agreement among the G7 economies in London in June. The two-pillar solution will be delivered to the G20 Finance Ministers meeting in Washington DC on October 13, and then to the subsequent G20 Leaders Summit in Rome.

The two-pillar solution, according to Sumit Singhania, Partner, Deloitte India, will result in a redistribution of $125 billion taxable profits annually, and ensure MNEs pay minimum 15% tax once this is implemented. A consensus on global minimum tax will practically make tax competition amongst nations rather unfeasible by narrowing down any such opportunities to rarest circumstances In the end, two-pillar solutions ought to be reckoned as enduring overhaul of a century old international tax regime, thats here to change the rule of the global profit allocation amongst taxing jurisdictions completely.

Why the minimum rate?

The new proposal is aimed at squeezing the opportunities for MNEs to indulge in profit shifting, ensuring they pay at least some of their taxes where they do business. According to Amit Singhania, Partner, Shardul Amarchand Mangaldas & Co., the two-pillar solution will ensure that once again, the world will be global, at least in following the principles of taxation rather than following territorial laws.

In April this year, US Treasury Secretary Janet Yellen had urged the worlds 20 advanced nations to move in the direction of adopting a minimum global corporate income tax. A global pact works well for the US government at this time. The same holds true for most other countries in western Europe, even as some low-tax European jurisdictions such as the Netherlands, Ireland and Luxembourg and some in the Caribbean rely largely on tax rate arbitrage to attract MNCs.

The proposal also has some degree of support from the IMF. While China is not likely to have a serious objection with the US call, a concern for Beijing would be the impact on Hong Kong, the seventh largest tax haven in the world, according to a study published earlier this year by the advocacy body Tax Justice Network. Plus, Chinas frayed relationship with the US could be a deterrent in negotiations.

Who are the targets?

Apart from low-tax jurisdictions, the proposals are tailored to address the low effective rates of tax shelled out by some of the worlds biggest corporations, including Big Tech majors such as Apple, Alphabet and Facebook, as well as those such as Nike and Starbucks.These companies typically rely on complex webs of subsidiaries to hoover profits out of major markets into low-tax countries such as Ireland, the British Virgin Islands, the Bahamas, or Panama.

The US loses nearly $50 billion a year to tax cheats, according to the Tax Justice Network report, with Germany and France also among the top losers. Indias annual loss due to corporate tax abuse is estimated at over $10 billion.

What are the problems with the plan?

Apart from the challenges of getting all major nations on the same page, since this impinges on the right of the sovereign to decide a nations tax policy, the proposal has other pitfalls. A global minimum rate would essentially take away a tool countries use to push policies that suit them. Also, bringing in laws by next year so that it can take effect from 2023 is is a tough task. The deal has also been criticised for lacking teeth: Groups such as Oxfam said the deal would not put an end to tax havens. Express Explained is now on Telegram. Click here to join our channel (@ieexplained) and stay updated with the latest

Where does India stand?

India, which has had reservations about the deal, ultimately backed it in Paris. Finance Minister Nirmala Sitharaman had last week said India is close to deciding the specifics of the two-pillar proposal and is in the final stages of deciding on the details.

India is likely to try and balance its interests, while asserting that taxation is ultimately a sovereign function. India may have to withdraw its digital tax or equalisation levy if the global tax deal comes through. OECD said the Multilateral Convention (MLC) will require all parties to remove all Digital Services Taxes and other relevant similar measures with respect to all companies, and to commit not to introduce such measures in the future.

To address the challenges posed by the enterprises who conduct their business through digital means and carry out activities in the country remotely, the government has the Equalisation Levy, introduced in 2016. Also, the IT Act has been amended to bring in the concept of Significant Economic Presence for establishing business connection in the case of non-residents in India.

Also, there are apprehensions on the impact of this deal on investment activity. The New York Times reported on October 7: India, China, Estonia and Poland have said the minimum tax could harm their ability to attract investment with special lures like research and development credits and special economic zones that offer tax breaks to investors.

Sitharaman on September 21, 2019 had announced a cut in corporate taxes for domestic companies to 22% and for new domestic manufacturing companies to 15%. The Taxation Laws (Amendment) Act, 2019 amends the Income-Tax Act, 1961 to provide for the concessional tax rate for existing domestic companies subject to certain conditions. Also, existing domestic companies opting for the concessional taxation regime will not be required to pay Minimum Alternate Tax.

This, along with other measures, was estimated to cost the exchequer Rs 1.45 lakh crore annually. The effective tax rate, inclusive of surcharge and cess, for Indian domestic companies is around 25.17%.

While taxation is ultimately a sovereign function, and depends upon the needs and circumstances of the nation, the government is open to participate and engage in the emerging discussions globally around the corporate tax structure. The economic division will look into the pros and cons of the new proposal as and when it comes and the government will take a view thereafter, said a senior government official. The average corporate tax rate stands at around 29% for existing companies that are claiming some benefit or the other.

Another official said New Delhi was proactively engaging with foreign governments with a view to facilitating and enhancing exchange of information under Double Taxation Avoidance Agreements, Tax Information Exchange Agreements and Multilateral Conventions to plug loopholes.

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Explained: Taxing Big Tech where it earns profits - The Indian Express

The logos of mobile apps, Google, Amazon, Facebook, Apple and Netflix, are displayed on a screen in this illustration picture taken December 3, 2019.

WASHINGTON, Oct 5 (Reuters Breakingviews) - A whistleblowers claim that Facebook (FB.O) chased profit rather than rein in hate speech leaves two questions for policymakers to answer: Do the social networks actions merit a regulatory response, and if so, what should it be? One answer to the second question might be to put a cap on the companys ability to sign up new users.

Facebooks critics are getting more airtime read more , and politicians are on the alert. Frances Haugen, who was a product manager at Facebook, is due to testify before the Senate on Tuesday, after detailing on the 60 Minutes show on Sunday the ways in which she says the platform failed to act on socially destructive content .

In some ways its a riff on an old theme. Alphabet-owned (GOOGL.O) video service YouTube last week banned Covid-19 vaccine misinformation after such topics flooded its site. Complaints filed by Amazon.com (AMZN.O) workers to the National Labor Relations Board have shot up during the pandemic. Chief executives have testified multiple times before Congress, and the Federal Trade Commission slapped a record $5 billion privacy-related fine on Facebook in 2019.

Still, the profit machine keeps humming read more . Facebooks second-quarter revenue jumped by 56% year-over-year and it has 3.5 billion monthly active users on its family of platforms. Ad sales for YouTube, with 2 billion monthly viewers, grew by 84%. Amazon is growing rapidly, too.

Technology regulators could instead take a page from a Wall Street watchdog read more . In 2018 after a wave of fake account scandals, the U.S. Federal Reserve ordered Wells Fargo (WFC.N) to keep its assets below a certain level just under $2 trillion until it improved its governance and risk management. That unusual cap remains in place.

A similar ceiling on user or subscriber growth, if policymakers decide its merited, would have a rapid effect. Such metrics are an obsession for Silicon Valley, fueling their influence and revenue, and share prices.

China got there already: Its government in July barred ride-hailing firm Didi Global (DIDI.N) from acquiring new users pending a data security investigation. In the United States, Congress would likely have to legislate such a penalty and grant authority to a regulator like the FTC to enforce it. Thats no simple task. But even the threat of such a move might get Big Tech to take its social impact more seriously.

Follow @GinaChon on Twitter

CONTEXT NEWS

- A Facebook whistleblower on Oct. 3 said the company repeatedly put profit over cracking down on misinformation and knew that its Instagram unit hurt the mental health of teenage girls, according to an interview on 60 Minutes.

- Frances Haugen, a former product manager on the civic misinformation team at Facebook, also said her lawyers have filed at least eight complaints about the social media platform with the U.S. Securities and Exchange Commission. She provided documents for a Wall Street Journal investigation on Facebook and will appear at a Senate hearing on Oct. 5.

Editing by John Foley and Marjorie Backman

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at http://www.breakingviews.com. All opinions expressed are those of the authors.

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Best tool to rein in Big Tech is a cap on users - Reuters

(Bloomberg) -- A rebound in megacap technology stocks that helped snap four weeks of declines for the Nasdaq 100 Stock Index had one notable exception this week: Facebook Inc.

Most Read from Bloomberg

A 0.3% gain for the social media giant on Friday wasnt enough to reverse losses the stock suffered earlier in the week amid intense scrutiny of its products and a global outage. Facebook shares ended the week down nearly 4%, marking the fourth-straight week of declines, the longest such stretch since the height of the Covid-19 crisis in March 2020.

The shares were down 14% from a September peak, the worst showing among the biggest U.S. technology companies. The weakness stood in contrast to gains for other big technology companies such as Microsoft corp. and Alphabet Inc., which both advanced about 2% this week.

Recent losses reflect a rise in Treasury yields, which have broadly weighed on growth stocks, along with a number of company-specific headwinds. This week saw a lengthy global outage of the companys sites, along with Senate testimony from a former insider turned whistle-blower, who argued that Facebook puts profits ahead of user safety.

Despite these issues, the stocks decline has some sensing a bargain. Facebooks price-to-earnings ratio is 24.4, below the 26.3 ratio for the S&P 500 Index. The stock is also trading at a discount to its average historical multiple, according to data compiled by Bloomberg. On Thursday, JPMorgan wrote that the stock looks undervalued and that it is buying the pullback.

Should the stock work its way back to record levels, that would be in line with historical precedent, which has seen Facebook recover through a number of high-profile crises.

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Truist Securities analyst Youssef Squali echoed this view on Friday, writing that this time does feel different, but the outcome ultimately is most likely the same - Facebook should still be a winner. The firm reiterated a buy rating on the stock.

(Updates shares with closing prices throughout.)

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Facebook Left Out of Big Tech Rebound in 4th Week of Losses - Yahoo Finance

Libertarian: No Need to Break Big Tech

Mondays massive outage is the latest sign Facebook is clearly in trouble and the government doesnt need to step in, argues Reasons Robby Soave. A month of disastrous news coverage after a whistleblower leaked internal documents fueled a new wave of criticism from tech skeptics, but the case for breaking it up is weaker than ever as the social-media giant crumbles. The outage, which also affected its Instagram app, was so bad that Facebook employees couldnt even get inside the companys headquarters: The security systems were part of the same network. And the revelation that its desperate to attract young users shows Facebooks relevance is probably fading. Its not in control of our lives, our economy or our democracy despite mainstream medias cynical attempts to convince the public otherwise.

Conservative: The Lefts Threat to Democracy

America faces an existential constitutional crisis, warns The Wall Street Journals Gerard Baker, and it owes at least as much to sustained antidemocratic behavior on the left and across much of the ruling classes as it does to the actions of a bombastic former president. Notably, the people who want to stop Donald Trump . . . themselves have been traducing political norms at least since he first came down that escalator in 2015, and not just with the Russia fabrications. If hed been able to flip three states to win in 2020, Does anyone think . . . this resistance movement . . . would have accepted it? Until those on the left acknowledge their own role in the undermining of democratic legitimacy, the crisis will only deepen.

Media watch: Politicizing the Pandemic

A New York Times piece titled Red COVID, fumes Jeremy Beckham at Glenn Greenwalds Substack, obscures the reality of the pandemic and manipulates data in favor of a self-congratulatory liberalism. The article claimed counties that voted overwhelmingly for Donald Trump had more than a four-fold greater mortality rate than counties that decisively voted against Trump. But the Gray Ladys crude analysis failed to adjust or account for age, the strongest predictor of COVID mortality. Consider: Republican voters tend to be older than Democratic voters. And rural counties, where Trump won by the largest margins, have older populations than suburban and urban counties. The piece was rife with sloppy data analysis so its laughable that it blames vax rates on a Republican Party hostile to science and empirical evidence.

From the right: The End of Team Biden

At Spectator World, Roger Kimball suggests Oct. 4, 2021, as the date that signaled the beginning of the end for Team Biden. Thats when supposedly moderate Attorney General Merrick Garland penned a memo that will go down in infamy, ordering the FBI to mobilize against parents who oppose critical race theory in public schools, citing (completely unnamed) threats. Whats really at issue is the criminalization of dissent: As Mary Chastain notes at Legal Insurrection, Garland & Co. want to figure out how to deal with parents who have the nerve to be involved in their childs education. Apparently that, snorts Kimball, must be met by nationalizing the police power of the state and stomping down on any resistance as if it were domestic terrorism.

Mideast eye: Israeli Strike at Iran Back on Table

Israel is making serious contingency plans to move unilaterally against Iran, should it become necessary, notes Ilan Berman at National Review. The step has never been Israels preference, and the goal would be only to cause temporary setbacks and complications to Tehrans path toward the bomb. But Irans nuclear program isnt standing still, and Tehran seems to think time is on its side. Prime Minister Naftali Bennett just said it outright at the United Nations: We will not allow Iran to acquire a nuclear weapon. If Israel does strike, predicts Berman, it will be because the United States and its international partners did not take Irans nuclear program, or Israels concerns, seriously enough.

Compiled by The Post Editorial Board

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No need to break Big Tech and other commentary - New York Post