Big Government versus Big Tech

I write about a lot of things. Around three-quarters is focused on finance and technology, but the rest meanders around life, taxes, government, the economy, global trade, regulatory matters and more. All of these latter areas can probably be summed up right now as:

INTERNET ANGER

No, I’m not angry with the internet. I love it. But governments, economies, trade, commerce and others are pretty angry with the big internet giants on two major fronts: their lack of regulation and lack of taxation.

This builds on my blogs of the other week, but I’ve noticed three major movements to change the internet world recently. The first has been the momentum behind Liz Warren, the possible democratic candidate for President of the US of A. She’s been very outspoken against the silicon valley giants and even blogged about it on Medium:

“Today’s big tech companies have too much power—too much power over our economy, our society and our democracy. They’ve bulldozed competition, used our private information for profit and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation … and I want to make sure that the next generation of great American tech companies can flourish. To do that, we need to stop this generation of big tech companies from throwing around their political power to shape the rules in their favor and throwing around their economic power to snuff out or buy up every potential competitor.”

You have Mark Zuckerberg responding:

“You have someone like Elizabeth Warren who thinks that the right answer is to break up the companies...if she gets elected president, then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge. And does that still suck for us? Yeah. I mean, I don’t want to have a major lawsuit against our own government... But look, at the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight.”

This tension between tech innovation and government regulation has existed for a long time. Just look at the US regulator’s decision to break up Microsoft back in the 1990s to see.

The issue is the power of the internet firms, their abuse of customer, avoidance of governance and dodging of tax. The US fails completely to regulate the big technology firms. China does a better job – at least their internet giants work with government and not against it – and Europe is caught in the middle.

Europe is doing something about that however, and Margrethe Vestager the Competition Commissioner and now Digital Lead for the EU is committed to change things.

This is where the second key debate takes off: tax. Vestager is demanding that digital giants pay proper tax. She has some backing too.

“Expectations are rife that the G20 group of the world's biggest economies will seal an OECD proposal that aims to find an agreement on taxing global tech giants by June next year …

“The OECD proposal—negotiated by 134 countries—would mean reallocating some profits and taxation rights to countries where digital giants do business, regardless of where the giants are headquartered.

“The new rules would mean that such companies would be taxed in places where they conduct significant business even if they do not have a physical presence there—an increasing reality in the digital age …

“If achieved, the deal will have survived major resistance, including by Washington and low tax nations such as Ireland or Luxembourg where big tech have set up international headquarters.”

The issue for Ireland and Luxembourg is losing big employment and investment in their economies as tax arbitrage is all that keeps the Apple’s, Google’s and Facebook’s in their domains. In fact, their issue is that if the G20 don’t go ahead with this plan, then the EU will do it alone. Ireland and Luxembourg, watch out!

Meantime, this is not the end of the issue. The end of the issue was highlighted by comedian Sacha Baron Cohen. If you didn’t see or hear it, please listen and watch. It’s an amazing speech and only 25 minutes long.

In it, he says things like:

“Zuckerberg at Facebook, Sundar Pichai at Google, at its parent company Alphabet, Larry Page and Sergey Brin, Brin’s ex-sister-in-law, Susan Wojcicki at YouTube and Jack Dorsey at Twitter.

“The Silicon Six—all billionaires, all Americans—who care more about boosting their share price than about protecting democracy. This is ideological imperialism—six unelected individuals in Silicon Valley imposing their vision on the rest of the world, unaccountable to any government and acting like they’re above the reach of law. It’s like we’re living in the Roman Empire, and Mark Zuckerberg is Caesar. At least that would explain his haircut.

“Here’s an idea. Instead of letting the Silicon Six decide the fate of the world, let our elected representatives, voted for by the people, of every democracy in the world, have at least some say.”

You get the idea. In fact, one of his core statements that hit most headlines was:

“Under this twisted logic, if Facebook were around in the 1930s, it would have allowed Hitler to post 30-second ads on his ‘solution’ to the ‘Jewish problem’.”

Ouch!

The unregulated, data abusing, advertising whores who are the internet giants are an issue, according to Sacha Baron Cohen. Actually, it’s not just him but everyone.

Another British comedian, David Mitchell, also highlighted this issue.

“I think the internet and the smartphone have been a disaster for civilisation. I think it would be very helpful for us to see it as a disaster, see it as something like nuclear weapons. It’s easier to get taxis, but that’s it. It’s addictive. It changes the nature of discourse in a horrible way. What was billed as the democratisation of knowledge has turned into the death of truth.”

He rightly picks out that people believe extremism views today, because they are not getting facts checked and vetted. Baron Cohen rightly picks out that when we watch TV or read newspapers, they have to get their facts right. It’s a law. On the internet, there is no law.

Will this change?

Possibly, but only if the internet is changed. The internet has to allow for users to own their identities and their data. Tim Berners-Lee has a few words to say about that:

One of the fiercest critics of the modern internet is the man who created it, Tim Berners-Lee. As the father of the web he has been vocally critical about the current state of the internet and how it is dominated by a small number of powerful companies, and how users have little control over their online data. This week, Berners-Lee unveiled his answer to these problems with a global action plan to tackle issues of access, privacy and openness of the web.

The Contract for the Web lays out nine key principals for a better internet, including promoting affordable internet access for all, respecting people's privacy and data rights, not allowing governments to cut off internet access and, perhaps most ambitiously of all given the current state of political rhetoric, building “strong communities that respect civil discourse and human dignity.”

Good luck with that Tim. I just have this gut feeling that there’s a few billionaires in Silicon Valley who will fight tooth and nail against it.