The terrible global cloud that is the Covid-19 pandemic offered the world the glimpse of a silver lining this week. New tax proposals by Joe Biden mean that the economic emergency caused by coronavirus could result in big multinational corporations having to pay the fair amounts of tax they have avoided for so long. A breakthrough this week at the 135-nation Organisation for Economic Co-operation and Development talks in Paris may produce an agreement. Giants like Facebook and Google would then have to pay up – and not before time. This is definitely a step in the right direction.
Until Covid, the OECD corporate tax negotiations that began nearly a decade ago had been deadlocked, especially after the Trump administration refused to agree to anything that might raise taxes on US tech giants. Individual nations, notably in Europe, had started to impose or threaten stiffer local taxes, leading to retaliatory threats from Washington, but without inhibiting the big multinationals’ lucrative tax-avoidance strategies. Under Donald Trump, the US had even made clear that it reserved the right to allow American corporations to remain outside any new OECD-brokered regime. Mr Biden abandoned that demand in January.
Things have changed even more now. The underlying reason is that Mr Biden needs to raise corporate taxes to pay for his expensive Covid stimulus and infrastructure renewal plans. The US president wants to raise $2.5tn from corporate taxes, reversing a Trump-era cut. But in doing so, he also needs to tighten up a system that has meant firms like Nike and FedEx, as well as the tech giants such as Amazon which Mr Biden specifically criticised last week, have paid little or no US federal tax for years. He also has to find ways of preventing US corporations from simply moving their profits offshore, as firms including Apple and big-pharma companies have been doing for years.
The upshot is the proposal made by the Biden administration. Under it, the very largest global companies – probably about 100 of them, and including tech and non-tech – would pay levies to national governments as part of a deal that sets a global minimum tax which the US wants to see at 21%. The plan would create stability to allow the administration to increase corporate taxes at home without the fear that other countries would undercut it with rates as low as Ireland’s current 12.5% corporate tax, divisive competitive tactics that have fed the multinationals’ profit-shifting strategies. This could bring an end to what the US treasury secretary, Janet Yellen, has criticised as a race to the bottom and has been dubbed a low-tax wild west.
There have been diplomatic signs this week that the US proposal may signal a breakthrough. This could in turn lead to an OECD agreement as soon as July. But an agreement, while desirable and welcome, would not be the end of the story. Unless and until the global taxation system is made truly watertight, the danger that corporations will continue to try to hide their profits in tax havens will always remain.
This puts Britain’s immense responsibilities in the spotlight, because several UK overseas territories and crown dependencies continue to have low or zero tax rates. These include Guernsey, Jersey, the Isle of Man, the Cayman Islands, the British Virgin Islands and Bermuda. The last three of these were recently ranked by the Tax Justice Network campaign as the three most significant enablers of corporate tax abuse in the world. Britain itself was ranked number 13. Mr Biden may have engineered a breakthrough, but Boris Johnson and Rishi Sunak must play a unflinchingly committed part if it is to succeed.
Google’s effort to build a “Privacy Sandbox” – a set of technologies for delivering personalized ads online without the tracking problems presented by cookie-based advertising – continues to struggle with its promise of privacy.
The Privacy Sandbox consists of a set of web technology proposals with bird-themed names intended to aim interest-based ads at groups rather than individuals.
Much of this ad-related data processing is intended to occur within the browsers of internet users, to keep personal information from being spirited away to remote servers where it might be misused.
So, simply put, the aim is to ensure decisions made on which ads you’ll see, based on your interests, take place in your browser rather than in some backend systems processing your data.
Google launched the initiative in 2019 after competing browser makers began blocking third-party cookies – the traditional way to deliver targeted ads and track internet users – and government regulators around the globe began tightening privacy rules.
The ad biz initially hoped that it would be able to develop a replacement for cookie-based ad targeting by the end of 2021.
But after last month concluding the trial of its flawed FLoC – Federated Learning of Cohorts – to send the spec back for further refinement and pushing back its timeline for replacing third-party cookies with Privacy Sandbox specs, Google now acknowledges that its purportedly privacy-protective remarketing proposal FLEDGE – First Locally-Executed Decision over Groups Experiment – also needs a tweak to prevent the technology from being used to track people online.
On Wednesday, John Mooring, senior software engineer at Microsoft, opened an issue in the GitHub repository for Turtledove (now known as FLEDGE) to describe a conceptual attack that would allow someone to craft code on webpages to use FLEDGE to track people across different websites.
That runs contrary to its very purpose. FLEDGE is supposed to enable remarketing – for example, a web store using a visitor’s interest in a book to present an ad for that book on a third-party website – without tracking the visitor through a personal identifier.
Michael Kleber, the Google mathematician overseeing the construction of Privacy Sandbox specs, acknowledged that the sample code could be abused to create an identifier in situations where there’s no ad competition.
“This is indeed the natural fingerprinting concern associated with the one-bit leak, which FLEDGE will need to protect against in some way,” he said, suggesting technical interventions and abuse detection as possible paths to resolve the privacy leak. “We certainly need some approach to this problem before the removal of third-party cookies in Chrome.”
In an email to The Register, Dr Lukasz Olejnik, independent privacy researcher and consultant, emphasized the need to ensure that the Privacy Sandbox does not leak from the outset.
It will all be futile if the candidates for replacements are not having an adequate privacy level on their own
“Among the goals of Privacy Sandbox is to make advertising more civilized, specifically privacy-proofed,” said Olejnik. “To achieve this overarching goal, plenty of changes must be introduced. But it will all be futile if the candidates for replacements are not having an adequate privacy level on their own. This is why the APIs would need to be really well designed, and specifications crystal-clear, considering broad privacy threat models.”
The problem as Olejnik sees it is that the privacy characteristics of the technology being proposed are not yet well understood. And given the timeline for this technology and revenue that depends on it – the global digital ad spend this year is expected to reach $455bn – he argues data privacy leaks need to be identified in advance so they can be adequately dealt with.
“This particular risk – the so-called one-bit leak issue – has been known since 2020,” Olejnik said. “I expect that a solution to this problem will be found in the fusion of API design (i.e. Turtledove and Fenced Frames), implementation level, and the auditing manner – active search for potential misuses.
“But this particular issue indeed looks serious – a new and claimed privacy-friendly solution should not be introduced while being aware of such a design issue. In this sense, it’s a show-stopper, but one that is hopefully possible to duly address in time.” ®
The Government and Enterprise Ireland are providing two funds to regional Irish businesses in a bid to help them transition to a greener, digital economy.
The Government has today (29 July ) announced it will provide €10m in funding through Enterprise Ireland to projects supporting digitalisation and the transition to a green economy.
The Regional Enterprise Transition Scheme, worth €9.5m, will provide grant funding to regional and community-based projects focused on helping enterprises to adapt to the changing economic landscape due to Covid-19 and Brexit.
Leo Clancy, CEO, Enterprise Ireland said: “The Regional Enterprise Transition Scheme is aimed at supporting regional development and the regional business eco-system, helping to create and sustain jobs in the regions impacted by Covid-19.”
Grants of up to €1.8m or 80pc of project cost are available to businesses. The projects should aim to address the impact of Covid-19 and improve the capability and competitiveness of regional enterprises.
The call for the Regional Enterprise Transition Scheme will close on 8 September 2021. The successful projects will be announced in October and all funding will be provided to the successful applicants before the end of the year.
A separate funding scheme, the €500,000 Feasibility Study fund, will provide financial support to early-stage regional enterprise development projects.
Launching the funding schemes, Minister of State for Trade Promotion, Digital and Company Regulation, Robert Troy TD said the funds would “help stimulate transformational regional projects to support enterprises embrace the opportunities of digitalisation, the green economy as well as navigate the changed landscape arising from Covid-19.”
Minister of State for Business, Employment and Retail, Damien English TD commented at the launch that the funds would help “build Covid-19 and Brexit resilience and enable applicants to support enterprises and SMEs to respond to recent economic and market challenges which also includes the transition to a low carbon economy, digital transformation and smart specialisation.”
The Feasibility Fund is open to new projects, with grants available of up to €50,000 or 50pc of project cost and will allow promoters to test their project concept and deliver virtual or site-based solutions to their target audience.
Applications for the Feasibility Fund close on 1st October 2021.
For more information and details on how to apply for the funds, see here and here.
Chief executives are being warned to “think twice before they tweet” after the boss of takeaway company Just Eat Takeaway was told his Twitter spat with Uber threatened to undermine the firm’s reputation.
Jitse Groen this week became the latest in a growing list of chief executives to be rebuked by customers, investors and even regulators over ill-judged tweets.
Cat Rock Capital Management, an activist investor which has a 4.7% stake in Just Eat, highlighted Groen’s Twitter battle with Uber boss Dara Khosrowshahi as an example of outbursts that damaged the brand. The investor said Groen’s tweets had partly led to the firm being “deeply undervalued and vulnerable to takeover bids at far below its intrinsic value”.
Earlier this year Groen had a rant at financial analysts on Twitter, claiming that “some can’t even do basic maths”. He tweeted that he was “amazed how bad these analysts have become … All of them mix up definitions. It’s unbelievable.”
Brand and marketing expert Mark Borkowski said Groen’s case highlighted the difficulty executives face when trying to engage with customers on the platform.
“Everyone sees Twitter as a huge marketing opportunity that can drive a business forward, and it really can,” Borkowski said. “But these bosses must stop and think twice before they tweet, as just one misjudged tweet can send their share price plunging.”
Possibly the most expensive tweets ever sent were posted by Elon Musk, the maverick boss of electric car company Tesla, in 2018. The US Securities and Exchange Commission fined Musk and Tesla $20m each after he tweeted that he had “funding secured” to take the company private at $420 a share. The regulator said the tweet, which sent Tesla’s share price up by as much as 13%, violated securities law. As part of the settlement, Musk was ordered to step down as Tesla’s chairman.
Musk’s tweets continued to anger some investors. Pirc, an influential adviser to shareholders including the UK’s local authority pension funds, last year recommended that investors voted against Musk’s re-election to the Tesla board because his tweets posed “a serious risk of reputational harm to the company and its shareholders”.
“Twitter is all about personality,” Borkowski said. “While Musk’s tweets can be very controversial, they fit with his brand. Twitter is perfect for renegades, mavericks and disruptor brands. It’s much harder for well-established brands with solid reputations, if something goes wrong for them they risk damage to their hard-earned brand.
“People now think that to run a successful business, you have to be on social media and every brand has to have a Twitter account,” he said. “The chief executives see that the bosses of their rivals have a Twitter profile, and they feel they have to have one too.”
Borkowski said some bosses have been very successful at building a presence and personality on Twitter, and using their platforms to promote social issues such as LGBTQ+ rights and the Black Lives Matter movement (as well as promote their brand and products).
James Timpson, the chief executive of cobbler Timpson, this week celebrated passing 100,000 followers on his account on which he weaves photos of his colleagues working in shops with posts tackling tax avoidance and prisoner reform.
This week, he responded to Boris Johnson’s proposal to create “fluorescent-jacketed chain gangs” of people found guilty of antisocial behaviour with a tweet suggesting offenders should be helped into work instead.
Tim Cook, the chief executive of Apple, has won praise for using Twitter to successfully pressure the governor of Indiana into revising proposed legislation that had threatened to allow discrimination against gay people on religious grounds.
Researchers at Harvard Business School and Duke University said Cook “effectively framed the debate using social media at a time when opinions were being formed and the impact went beyond the political”.
Borkowski suggested that before chief executives tweet they should “consider whether they have the personality and temperament to get the tone right each time”.
“There is nothing more inelegant than a chief executive going after rivals publicly on Twitter,” he said.
It was exactly that sort of behaviour that Cat Rock had accused Groen of undertaking. When Uber Eats announced earlier this year that it would take on Just Eat in Germany, Groen lashed out in a tweet directed at Khosrowshahi, accusing him of “trying to depress our share price”.
Khosrowshahi replied that perhaps Groen should “pay a little less attention to your short term stock price and more attention to your Tech and Ops”. That sparked Groen to reply “thank you for the advice, and then if I may .. Start paying taxes, minimum wage and social security premiums before giving a founder advice on how he should run his business”.
Alex Captain, Cat Rock’s founder, said: “The response should not happen on Twitter. It should happen on a credible forum with the facts, data, and analysis that the company has at its disposal.”
A Just Eat spokesperson said: “Just Eat Takeaway.com has a regular dialogue with all its shareholders and we take all their views very seriously.”