EU divided on digital tax

Fears over a reaction from the US has sent Finance Ministers from Ireland, Sweden and Denmark cowering back to their spreadsheets as the EU digital tax hits an early stumbling block.

While the collective bargaining power and protection afforded by the European Union is certainly useful, the cumbersome nature of the bureaucratic beast and unanimous decision making ensures it is anything but. As with many proposed rule changes in the past, objections from a handful of member states have slammed the emergency brakes on the digital tax, aimed at holding the internet giants accountable.

According to the Guardian, the Finance Ministers of Ireland, Sweden and Denmark have all aired their criticism not on the concept of the tax, but fears over what President Trump might suggest as a retaliation. There’s a pragmatic approach to business and there’s spineless appeasement to a bully, we’ll let you decide which one this is.

Of course, it would be unfair to herd all of the EU member states into the same cowardly-corner as Ireland, Sweden and Denmark. 12 member states are already moving ahead with their own plans to create a localised digital tax, including the UK as was announced during the Autumn Budget, and some are acting somewhat hawkish about it. The French Government has suggested it would like the tax rates on the playing field by the end of 2018, though Germany seems to be favouring a more watered-down version of the rules.

The EU wide tax on those taking advantage of creative tax regimes, would be the best solution however. A united front against the slippery Silicon Valley internet giants, as well as those from other nations around the world, would of course be the best way to claim that 3% of local revenues, but it is becoming more difficult to imagine that a reality.

The fainthearted trio do of course have something to worry about. Despite Trump slapping tariffs on Chinese goods, and threatening to revamp tax laws so Amazon cannot take advantage of the US tax havens, he would most likely take the US tax as an attack on American values and a threat to the borders. The President is a man or rarely recognises consistency and before too long will probably be describing Jeff Bezos as a close family friend who have been relentlessly pursued by the penny-pinching Europeans.

Ireland also has a lot to lose. After proving it was incapable of managing its finances in a responsible way, the technology giants could be seen as somewhat of a saviour to the economy. Apple, Facebook and Google are just a few names who house a considerable base in the country. Ireland certainly has its own interests to protect.

It’s disappointing to see such weak behaviour in the face of an orange-hued, bullying politician, but at least there are some nations who are prepared to go it alone and hold the internet giants accountable to fair taxation.

Connected speakers could refresh smart home euphoria

Enthusiasm for connected devices is on the rise, but it’s taking the buzz away from smart appliances and the smart home category on the whole.

According to research from GfK, products which are geared towards improving connectivity and entertainment are gaining traction in the market, though this is replacing the appetite for smart home appliances which are geared towards efficiency and functionality.

“Take-up of smart home products in the UK continues to rise, with interactive speakers the hot product of the last year,” said Trevor Godman, Divisional Director at GfK. “In contrast however, the level of consumer excitement about smart home as a category has lost momentum somewhat – particularly for smart appliances and smart health products.  As smart home pivots to the mass market, it is essential that manufacturers look at what is holding consumers back and communicate compelling benefits that capture consumers’ imaginations.”

While Godman is taking a rather negative approach to the trends, we do not see it in the same light. The idea of the smart home, and various devices in the kitchen or around the house being connected and programmable is not a new idea. The smart fridge or connected light bulbs have been around for years without stimulating enough momentum for the segment to really take off. A creative spark was needed to engage consumers and offer an attractive proposition, unfortunately, smart energy readers do not offer this. Smart speakers and TVs do however.

For the mass market to embrace new ideas, there needs to be genuine excitement. Being able to switch the light in the living off with your smartphone might be functional and useful occasionally, but the smart speakers capture the imagination of the consumer. These are products consumers would actually want to buy, instead of a central heating system which reacts to the weather outside.

According to the research, the UK smart home market was worth £900 million in 2017, making it the second largest market in Europe. It has also become the fastest growing, increasing by 19% in value from 2016 and 35% by volume. There are now 336 brands offering 3,777 smart home products, while 85% of the UK’s online population now own at least one smart product, and the number owning four or more has grown from 35% last year to 44% this year. The fastest growing segment is smart speakers, though this does seem to be at the expense of other categories.

Manufacturers of smart cookers or connected mirrors might look at these statistics and worry, though GfK suggests consumers who plan to buy a smart device or appliance in the future have their sights set on a wide range of products. The smart home might have failed to deliver over the last couple of years, though the accessibility and entertainment value of smart speakers does seem to open up consumers to new purchases.

The purchase of smart home devices might not be growing across the board, but that isn’t necessarily awful for those who have their eyes on the long-game. Smart speakers are normalising the idea of the connected economy. Once the basic concept has been accepted by the mass market, the opportunity to sell becomes significantly easier as value is more readily realised and accessible.

Philips might preach about the benefits of a smart central heating system, but the frivolous purchases were needed to normalise the segment first. The smartphone ecosystem didn’t explode overnight, there were years of adoption as the touch user interface become second-nature, the same could be said here. Frivolous purchasing is needed before the connected bug can spread throughout the home.

Europe gets tech and ad giants to play ball on ‘online disinformation’

The European Commission’s drive to control what takes place online took one more step forward with the unveiling of a code of practice on online disinformation.

This code has apparently been signed up to by unnamed internet and advertising giants, but in its current form it appears to be nothing more than a set of vague aspirations designed to placate the EC for now. However it will probably be used as the thin end of the wedge to extract further concessions down the line.

It is an important step in tackling a problem which has become increasingly pervasive and threatens Europeans’ trust in democratic processes and institutions,” said Commissioner for Digital Economy and Society Mariya Gabriel. “This is the first time that the industry has agreed on a set of self-regulatory standards to fight disinformation worldwide, on a voluntary basis.

“The industry is committing to a wide range of actions, from transparency in political advertising to the closure of fake accounts and demonetisation of purveyors of disinformation, and we welcome this. These actions should contribute to a fast and measurable reduction of online disinformation. To this end, the Commission will pay particular attention to its effective implementation.”

Voluntary. That’s a good one. You can find out more about this voluntary code on this European Commission site. Disinformation is defined as ‘verifiably false or misleading information’. One good example of this could be describing something as ‘voluntary’ when in fact it was subject to duress. The EC and signatories will presumably argue the toss over what qualifies as ‘misleading’ for a while before everyone moves on.

Twitter wants your help with censorship

Social network Twitter continues to agonise over how it should censor its users and thinks getting them involved in the process might help.

While all social media companies, and indeed any involved in the publication of user-generated content, are under great pressure to eradicate horridness from their platforms, Twitter probably has the greatest volume and proportion of it. Content and exchanges can get pretty heated on Facebook and YouTube, public conversation giant Twitter is where it seems to really kick off.

This puts Twitter in a tricky position: it wants people to use it as much as possible, but would ideally like them to only say nice, inoffensive things. Even the most rose-tinted view of human nature and interaction reveals this to be impossible, so Twitter must therefore decide where on the nice/horrid continuum to draw the line and start censoring.

To date this responsibility has been handled internally, with a degree of rubber-stamping from the Trust and Safety Council – a bunch of individuals and groups that claim to be expert on the matter of online horridness and what to do about it. But this hasn’t been enough to calm suspicions that Twitter, along with the other tech giants, allows its own socio-political views to influence the selective enforcement of its own rules.

So now Twitter has decided to invite everyone to offer feedback every time it decides to implement a new layer of censorship. Do date the term ‘hate’ has been a key factor in determining whether or not to censor and possibly ban a user. Twitter has attempted to define the term as any speech that attacks people according to race, gender, etc, but it has been widely accused of selectively enforcing that policy along exactly the same lines it claims to oppose, with members of some groups more likely to be punished than others.

Now Twitter wants to add the term ‘dehumanizing’ to its list of types of speech that aren’t allowed. “With this change, we want to expand our hateful conduct policy to include content that dehumanizes others based on their membership in an identifiable group, even when the material does not include a direct target,” explained Twitter in a blog post, adding that such language might make violence seem more acceptable.

Even leaving aside Twitter’s surrender to the Slippery Slope Fallacy, which is one of the main drivers behind the insidious spread of censorship into previously blameless areas of speech, this is arguably even more vague than ‘hate’. For example does it include nicknames? Or as the BBC asks, is dehumanizing language targeted at middle-aged white men just as hateful as that aimed at other identity groups?

Perhaps because it’s incapable of answering these crucial questions Twitter wants everyone to tell it what they think of its definitions. A from on that blog post will be open for a couple of weeks and Twitter promises to bear this public feedback in mind when it next updates its rules. What isn’t clear is how transparent Twitter will be about the feedback or how much weight it will carry. What seems more likely is that this is an attempt to abdicate responsibility for its own decisions and deflect criticism of subsequent waves of censorship.

 

Europe approves tough new digital copyright position

The European Parliament has voted to adopt a position on copyright rules that opponents inevitably fear will break the internet.

This is an incremental, but significant step towards Europe implementing laws that will impose new conditions on internet companies to compensate rights holders when they share their copyrighted material. The position was initially rejected back in July but in true EU style they decided to keep voting on it again until it went the right way.

“I am very glad that despite the very strong lobbying campaign by the internet giants, there is now a majority in the full house backing the need to protect the principle of fair pay for European creatives,” said Eurocrat Axel Voss.

“There has been much heated debate around this directive and I believe that Parliament has listened carefully to the concerns raised. Thus, we have addressed concerns raised about innovation by excluding small and micro platforms or aggregators from the scope.

“I am convinced that once the dust has settled, the internet will be as free as it is today, creators and journalists will be earning a fairer share of the revenues generated by their works, and we will be wondering what all the fuss was about.”

“Discussions between the co-legislators can now start on a legislative proposal which is a key element of the Digital Single Market strategy and one of the priorities for the European Commission,” said Eurocrats Andrus Ansip and Mariya Gabriel in a joint statement.

“Our aim for this reform is to bring tangible benefits for EU citizens, researchers, educators, writers, artists, press and cultural heritage institutions and to open up the potential for more creativity and content by clarifying the rules and making them fit for the digital world. At the same time, we aim to safeguard free speech and ensure that online platforms – including 7,000 European online platforms – can develop new and innovative offers and business models.

“The Commission stands ready to start working with the European Parliament and the Council of the EU, so that the directive can be approved as soon as possible, ideally by the end of 2018. We are fully committed to working with the co-legislators in order to achieve a balanced and positive outcome enabling a true modernisation of the copyright legislation that Europe needs.”

The usual suspects are appalled at this development with the saveyourinternet.eu site featuring the following statement: “The European Parliament blatantly disregarded your thousands of emails, calls and messages and adopted a horrible version of Article 13 on 12 September. But the battle against Article 13 isn’t over: we must now ask the EU governments to stand up for our rights!”

At its core this seems to be about sharing stuff on the internet and to what extent the owner of the stuff being shared should get some kind of royalty payment every time it’s done. On one hand the internet has wrecked industries like music and journalism by making it so difficult for them to charge people for consuming their products, but on the other the genie is out of the bottle and such sharing is endemic. Either way this debate seems likely to rage for some time yet.

Teens feel they’re being manipulated by tech giants

A new report from US youth-advisory NPO Common Sense claims 72% of US teens feel they are being manipulated to spending more time on their smartphones.

The report, which covers a wide range of topics from the preferences of teenagers in the US through to the emotional impact social media has on their lives, makes the bold claim Silicon Valley is playing the puppet master with the emotionally fragile teens being pulled from pillar to post. Unfortunately, while these teenagers realise they are being manipulated into spending more time on mobile devices as opposed to other important tasks, they seemingly feel somewhat powerless to resist.

“They understand that tech companies are manipulating them into spending more time on their devices, but they aren’t always able to resist,” the report states. “This is especially concerning when it comes to teens going to sleep or driving, where the potential health impacts for young people are substantial. But there are other, subtler ways in which teens may not even realize they’re being tracked or manipulated.”

With 72% recognising they are possibly being manipulated into spending more time staring at the tiny screen, you have to question why they are seemingly accepting this as an inevitability. Unfortunately, whether recognised or not, due to the way in which the digital society has developed, teenagers are becoming empowered or disillusioned by the success of social media activities. Although the negative impact is noted, the acknowledgement is not enough to remove the strangle hold on the emotional well-being of this demographic.

For those who are classed as having low social-emotional well-being, 70% sometimes feel excluded when using social media, 43% have deleted posts due to not having enough ‘likes’ and 43% feel bad about themselves if no-one reacts to their posts. The post reaction is an interesting one which the technology companies seem to be capitalizing on by expanding the variety of ways users can interact with a post (a range of different emojis). This has the power to compound the impact of the reaction on the user. 21% also feel more popular by using social media, 20% more confident and 18% better about themselves. These statistics show there is the power of good in social media.

While we might feel sorry for this apparently emotionally fragile segment of society, you have to question whether this is to patronising. It is easy to sit upon a strident high-horse and cast criticism down, though some adults should perhaps have a look at themselves. Your correspondent is guilty of checking how many likes have been received when putting something up on social media. Just because the media attention is directed towards teenagers does not mean we are not just as vulnerable or crave the validation of social media acceptance.

Another interesting aspect of the report is the way in which we communicate. Unsurprisingly, preference for face-to-face communication is declining, though it has now been over-taken as the most popular answer in favour of texting. Texting was selected as the top answer by 35% of respondents, in-person by 32%, 16% for social media and 10% selected video chatting.

Digital means of communicating are becoming increasingly popular, this is not news, though the question should be asked as to whether this is the new norm. This demographic is the first which could genuinely claim to be digitally native, and considering the aggressive thrust of technology in the face of young people nowadays, there should be little surprise. Perhaps this is only a blip, and as these young people mature they will realise the value of face-to-face communications? We doubt it, and believe this to be another patronising assumption.

Again, adults are not immune from this behaviour for which teens get criticized so heavily for. In your office, how often do you send an email instead of walking the thirty yards to have a conversation with a colleague? How often are phone calls ignored? How often are catch-ups done nowadays over the phone instead of going to grab a coffee? This might sound incredibly preachy, but your correspondent is incredibly guilty of it, occasionally ignoring a phone call in the knowledge an easier-to-deal-with email or WhatsApp message would follow.

Hearing technology companies are potentially emotionally manipulating teenagers into using their platforms more often is hardly a surprise, it is how they make money after all. But before you feel too sorry for the teenagers of the world, perhaps you should consider how much of a hold these platforms have on your life.

Trump declares war on Google

US President Donald Trump has tweeted that Google search results about him are biased in favour of leftwing media.

Leaving aside whatever Machiavellian motives Trump has for tweeting for the time being, this move seems to mark an escalation in the debates over the role the big internet companies play in controlling the flow of public information and discussion. Being openly accused of acting in bad faith by such a powerful person is not something Google can afford to ignore.

Here are the tweets in question, which have apparently been slightly revised since they were first published.

Unsurprisingly Google rejects these accusations. At time of writing it didn’t seem to have published a blog, or whatever, on the matter, but it has sent statements to a bunch of media. In keeping with the theme of this piece here’s an NBC Politics tweet containing the statement.  

Trump isn’t the first to flag up perceived leftwing bias from internet giants such as Google and Facebook, and may well be opportunistically riding that wave ahead of US midterm elections in November, in which all of the seats in the House of Representative and a third of the seats in the Senate are up for grabs. At the very least it seems likely he’s trying to swing search results in his favour at this critical juncture.

This is also a sensitive time for Google, especially on this topic. Its claims not to let its search results be affected by political ideology come just a few days after it had to deal with internal concerns that it’s planning to do just that in order to get back into the Chinese market. There is huge pressure on internet giants to censor undesirable content from their platforms, but if they accept the role of censor then they can’t be surprised if they also get accused of bias.

Russian telcos push for OTT tax on new data storage laws

Russian telcos are lobbying the government to grant new powers which would allow them to tax non-domestic internet companies to ease the burden of new data storage laws.

According to Reuters, the telcos are proposing new legislation to ease the financial burden of the new laws designed to give the state more oversight on communications within the country. As part of the new rules, telcos would be forced to store customer data in the country (calls, texts, internet search history etc.) for six months. The data storage rules come into force in October.

Ahead of the October launch date, the telcos have warned the imposition would result in larger costs. To protect the pockets of shareholders and executives alike, the telcos have suggested these incurred costs for data storage would be passed onto the consumer with tariffs potentially rising as much as 10%. Should the government look favourably on the proposed bill, telcos could seek compensation for the costs from non-domestic internet companies such as Facebook and Google.

Of course it seems perfectly reasonable for telcos to want to spread the burden of the digital economy throughout the ecosystem, it has largely bore the brunt of the financial expense while others profits at the top of the value chain for years, but this is a different matter. Facilitating government ambitions to more surgically monitor citizens and potentially eradicate the concept of privacy might not sit easily with the internet giants.

That said, bowing to government ambitions despite a conflict with apparent principles of the organization is a story which has been hitting the headlines recently. In an effort to penetrate the Great Firewall of China, Google has been creating a censorship-friendly version of its news app which could filter out stories which do not please the government. Google is not alone here as LinkedIn accepted these censorship rules years ago.

Other technology companies might not be as flexible as Google or LinkedIn. Those who maintain principles and refuse to fund the governments ambitions to rid Russia of independent thought will potentially face regulator Roskomnadzor reducing the speed of access to their websites for Russian users.

This is nothing but a proposal for the moment, though should it progress, the internet companies will face another principles versus profits dilemma.

So much for ‘Don’t be Evil’ as Google bows to China censorship – sources

Many of the internet giants managed to put principles before profits when dealing with China, but willpower does seem to be fading as Silicon Valley attempts to work around the Great Chinese Firewall.

Search giant Google is seemingly the next to sacrifice freedoms of modern society in pursuit of the fortunes promised in the Chinese market. According to the Intercept, Google is currently developing a news-aggregation app for use in China which will comply to the governments strict censorship rules. While this is only a news app for the moment, it is a foot through the door; once present, it might be easier to launch further services.

Bowing to the demands of the ‘inquisitive’ Chinese government is not uncommon, though many of the internet players have resisted to date. LinkedIn did cave, and while it did seem Facebook was getting closer after years of wooing, including a very smoggy run around Tiananmen Square from CEO Mark Zuckerberg, though the failure to retain a business registration suggests the team was not willing to submit completely.

Google has reportedly been working on the app since early 2017, with the project codenamed ‘Dragonfly’. The first versions of the app have already been shown to officials, while the final version could be launched in the next six to twelve months, pending final approval from the government. The app would allow the government to block what is deems unfavourable content on topics such as political opponents, free speech, sex, news, and academic studies.

Content banned in China of course includes anything which directly criticises the ruling party, though also past events. Any references to the 1989 Tiananmen Square massacre as anything more than a Western myth are banned for instance, while any content which is focused on bringing down the establishment also hits the firewall. Both 1984 and Animal Farm by George Orwell have been banned. Sites which have been banned include social media such as Twitter and Facebook, but also the BBC, Wikipedia and the New York Times.

One question which might be worth asking is whether this is too little too late. Google left the country eight years ago, refusing to succumb to the censorship demands, though in the void, Baidu emerged. This has been the case for all the Silicon Valley companies who deserted China, a domestic alternative appeared. As reported in the quarterly earnings earlier this week, Baidu is doing well. Google might be the dominant search engine everywhere else, but people are creatures of habit; before it can make any money it will have to convince Chinese consumers to leave the familiar and engage with a distant memory.

The app itself will not only automatically block websites which feature on the Chinese sh*t list, but also complete searches. Certain words and phrases will be caught by the filter blocking any results from appearing on the page. The development of the app has been limited to a couple of hundred employees, though the majority are unlikely to receive the news well.

Google’s work with the US Defence Department to aid the accuracy of drone strikes with its AI technology was not well received, with a few thousand employees threatening to leave the business unless ‘Project Maven’ was ended. These employees at least maintain the principles of Silicon Valley, seemingly still living to the “Don’t be Evil” mantra of Google, even if it has been removed from the official code of conduct, and we suspect they will not receive news of the censored app favourably.

Google has a very positive image around the world. Despite making billions in profit each quarter, dealing with data in a questionable manner and constantly being investigated by the European Commission for antitrust violations, the brand has managed to maintain this friendly and upbeat persona. Whether censorship impacts this image remains to be seen.

Eurocrats lose vote to ‘break the internet’

The European Parliament has voted to reject a new Copyright Directive that many feared would critically damage the way we use the internet.

The Directive on Copyright in the Digital Single Market is positioned as an attempt to harmonise online copyright laws with offline ones and, of course, to standardise these across the continent. The key distinction seems to be around the republishing of copyrighted material, which happens all the time online via memes, mash-ups and all kinds of other user-generated interpretations of public material.

You can read the full details of the proposed directive, together with the reasons for drafting it, here. But for those of you that have better things to do with their time, the stated rationale is to encourage creativity by giving rights holders more protection. Those opposed to it, of which there are many, think it will undermine a core premise of the internet by imposing onerous copyright burdens on platforms and creators.

The part that upset these dissenters is Article 13:

Use of protected content by information society service providers storing and giving access to large amounts of works and other subject-matter uploaded by their users

  1. Information society service providers that store and provide to the public access to large amounts of works or other subject-matter uploaded by their users shall, in cooperation with rightholders, take measures to ensure the functioning of agreements concluded with rightholders for the use of their works or other subject-matter or to prevent the availability on their services of works or other subject-matter identified by rightholders through the cooperation with the service providers. Those measures, such as the use of effective content recognition technologies, shall be appropriate and proportionate. The service providers shall provide rightholders with adequate information on the functioning and the deployment of the measures, as well as, when relevant, adequate reporting on the recognition and use of the works and other subject-matter.
  2. Member States shall ensure that the service providers referred to in paragraph 1 put in place complaints and redress mechanisms that are available to users in case of disputes over the application of the measures referred to in paragraph 1.
  3. Member States shall facilitate, where appropriate, the cooperation between the information society service providers and rightholders through stakeholder dialogues to define best practices, such as appropriate and proportionate content recognition technologies, taking into account, among others, the nature of the services, the availability of the technologies and their effectiveness in light of technological developments.

Thanks to the involvement of prominent figures like Actor Stephen Fry, Internet creator Tim Berners-Lee and Wikipedia founder Jimmy Wales, the opposition movement was large and prominent. A bunch of them sent a letter to the President of the European Parliament and saveyourinternet.eu urged people to hassle their own MEPs about it. A few national Wikipedia sites even shut themselves down in protest prior to the vote.

Well it seems to have worked because the vote took place today and 318 out of 627 MEPs voted against it, with 31 abstaining. This apparently means the whole thing is shelved until September, then it will be debated further and, in theory, amended before being voted on once more. You can be sure those amendments will be closely scrutinised by the above protest groups.

MEP Axel Voss was the person promoting the directive within the European Parliament. He wasn’t happy with the nature of the opposing campaigns and had the following to say after he lost. “I regret that a majority of MEPs did not support the position which I and the Legal Affairs Committee have been advocating. But this is part of the democratic process. We will now return to the matter in September for further consideration and attempt to address peoples’ concerns whilst bringing our copyright rules up to date with the modern digital environment.”

Jimmy Wales was pretty happy and symbolically retweeted a photo from a Hollywood movie to both celebrate the victory and illustrate the kind of meme-driven online activity that he and his fellow dissenters feared would be prohibited by the directive.

The #saveyourinternet campaign came over as somewhat hysterical and hyperbolic, but it made its point well and, for the time being at least, won. Europe has a bad habit of prioritizing harmonization and standardization over all other considerations and this was probably a much needed reality check. Voss and co will surely need to deliver substantial improvements to the directive before any of those 318 MEPs can justify switching sides in September.