UK government eyes up Silicon Valley for tax raid

Chancellor of the Exchequer Phillip Hammond has confirmed a ‘digital tax’ in the autumn budget aimed at holding the internet players accountable to reasonable tax rates.

In recent years, the internet giants of the US have become known as much for creatively sidestepping the tax man as they have for innovative products and services, but the playing field is shifting. The European Commission is currently attempting to align the interests of all member states to impose its own tax regime, though Hammond isn’t waiting for the boresome Brussels bureaucrats.

“The UK has been leading attempts to deliver international corporate tax reform for the digital age,” said Hammond in the House of Commons while unveiling the budget. “A new global agreement is the best long-term solution. But progress is painfully slow. We cannot simply talk forever.

“So we will now introduce a UK Digital Services Tax. This will be a narrowly-targeted tax on the UK-generated revenues of specific digital platform business models. It will be carefully designed to ensure it is established tech giants – rather than our tech start-ups – that shoulder the burden of this new tax.”

This is the tricky aspect of the new tax; how do you hold the internet giants accountable within placing too much of a burden on the start-ups? These are companies which need assistance to thrive, and an important segment for the UK. Start-ups, most importantly technology start-ups, have been targeted by the UK government to stimulate the economy in a post-Brexit world, but with the threat of digital tax, will these companies want to choose the UK?

The tax will be targeted at revenues generated through search engines, social media platforms and online marketplaces. Long story short, 2% of total revenues generated in the UK will be claimed by the tax man, generated £400 million a year, in theory. The new tax regime will come into place in April 2020, though should the European Commission come up with its own approach, the whole scheme might be scrapped.

For years the internet giants have been shifting profits around and claiming suspect charges to reduce exposure to the tax man. According to a Tax Watch UK study looking at Apple, Google, Facebook, Cisco Systems and Microsoft, the tax liability in 2017 was estimated at £1.26 billion, though only £191 million was paid.

Politically the digital tax is a win for the Conservative government, though at a time where the UK needs to make as many friends as possible while going through an expensive divorce, it is an interesting approach. With a no-deal Brexit looking increasingly likely, the UK needs to attract new investment into the economy and build relationships with trade partners. Taking a combative approach to tax is hardly going to get the internet giants on side, and might well irritate the US government.

Tackling the creative accountants in Silicon Valley has been a government discussion for years, though whether the aggressive approach from the UK will stimulate any progress through the rest of the world remains to be seen.

Democrats eye up Bill of Rights for the Internet

With Silicon Valley seemingly not doing enough to empower the consumer in the digital era, Congressman Ro Khanna is working on new proposals to more tightly regulate the technology industry.

Congressman Khanna, the Democratic representative of California is suggest a new Bill of Rights for the Internet, which would provide more rights for the consumer in controlling how personal information is collected, transferred and utilised. The aim here is simple; pull the balance of power over to the side of the consumer.

While this does sound like a logical idea, the technology industry has largely slipped through the legislative grey areas for years, before such proposals could even be considered the Democrats would have to win the November mid-term elections.

The idea for the Bill would focus on the following principles. Individuals should have the right:

  1. To have access to and knowledge of all collection and uses of personal data by companies;
  2. To opt-in consent to the collection of personal data by any party and to the sharing of personal data with a third party;
  3. Where context appropriate and with a fair process, to obtain, correct or delete personal data controlled by any company and to have those requests honoured by third parties;
  4. To have personal data secured and to be notified in a timely manner when a security breach or unauthorized access of personal data is discovered;
  5. To move all personal data from one network to the next;
  6. To access and use the internet without internet service providers blocking, throttling, engaging in paid prioritization or otherwise unfairly favouring content, applications, services or devices;
  7. To internet service without the collection of data that is unnecessary for providing the requested service absent opt-in consent;
  8. To have access to multiple viable, affordable internet platforms, services and providers with clear and transparent pricing;
  9. Not to be unfairly discriminated against or exploited based on your personal data; and
  10. To have an entity that collects your personal data have reasonable business practices and accountability to protect your privacy.

Of course, many of these principles are ideas which should have been implemented before the internet ball got rolling. Now it is travelling at such a speed it might be difficult. Another factor to consider is the power of the internet giants. These are massive organizations, with heavy-hitting financial punches and an influential lobby. They won’t like the idea of such principles being written into law, so expect some notable resistance.

But first, to even consider such proposals, the Democrats would have to win the mid-term elections. All 435 seats in the House of Representatives are up for election, though 147 and 182 seats are considered safe for the Republicans and Democrats respectively. A further 51 will probably be won by the Republicans and 10 by the Democrats. The interesting battles are the ones which could go either way; 42 of these are currently held by the Republicans and 3 by the Democrats. A majority here has been set as a target, though to pass any new legislation, the Democrats would also have to win the Senate over.

In the Senate, 35 out of the 100 seats are being contested. Three of the contested seats are considered safe for the Republicans and 14 for the Democrats. 2 will probably be held by the Republicans and 8 probably held by the Democrats. 8 seats, four of which are held by either party, could go either way. Here it still looks like the Republicans will maintain control, dampening the potential for any new technology regulations.

The internet giants should have more regulations dictating the field of play, though with the current political landscape it does look like that will be difficult. Even if the Democrats win in the House, a scenario which some believe to be realistic, a Republican Senate will mean gridlock for future legislation.

State versus federal battle looms as California signs net neutrality into law

California Governor Jerry Brown has been busy; 31 state bills vetoed and 34 signed into law, including the controversial net neutrality rulings, kicking off another state versus federal battle.

State Bill 822, claimed to be the strongest net neutrality laws in the country, has officially been signed into law in the State of California, but it only took the US Department of Justice a few minutes to throw a wobbly. Before the army of busybodies and privacy advocates could even get their own press releases out, the Justice Department filed a lawsuit alleging that Senate Bill 822 unlawfully imposes burdens on the Federal Government’s deregulatory approach to the Internet.

“Under the Constitution, states do not regulate interstate commerce – the federal government does,” said Attorney General Jeff Sessions in the filing. “Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy. The Justice Department should not have to spend valuable time and resources to file this suit today, but we have a duty to defend the prerogatives of the federal government and protect our Constitutional order.  We will do so with vigour. We are confident that we will prevail in this case – because the facts are on our side.”

Democrat FCC Commissioner Jessica Rosenworcel is clearly excited despite the legal complications:

After being passed back in February 2015, the appointment of FCC Chairman Ajit Pai saw a Republican led assault, with the telcos playing a supporting roles in the wings, on the rules. It didn’t take long for Pai to dismantle net neutrality, the vote to repeal the rules was won on 14 December 2017, though the backlash was almost immediate. Washington State was the first to pass local net neutrality rules, though with 23 Attorney Generals throwing their weight behind the cause it was only going to be a matter of time before other got involved. California is a different beast however, a worthy opponent of the US government.

With a population of roughly 39 million and a gross state product (GSP) of roughly $2.6 trillion, it is the largest in the US in terms of population and economic output. Globally, the economy is only smaller than the GDP of the US, UK, China, Germany and Japan. It is also home to Silicon Valley and the lobby power of the likes of Facebook, Google and Twitter.

While we do have sympathy with California and the internet giants, we do not feel net neutrality is the right way to go. Pai’s approach, reinstating the wild-west internet with the telcos as the tyrants of terror, is equally wrong. Both approaches are too extreme, the right answer lies in the middle, with the telcos afforded the opportunity to make money but still held accountable ensuring the consumer and businesses are not held to ransom. Taking the sensible, middle-ground is the logical approach, but set against the backdrop of such a combative political environment, it will be some time before fairness sets in.

But why is this such an important battle?

In its law suit, the Department of Justice is completely correct in stating California has overstepped its jurisdiction. No state should have the right to impose its own rules on another and the internet by definition is an interstate (international would be more accurate) playground. For these rules to be accepted on a legal basis in the US, California would have to ensure it was only applying the rules to traffic which originated, remained and terminated in California. Not only would this be pretty much impossible, but it would likely only account for a very small percentage of the total.

The stickiness is the clauses in the Communications Act, the piece of legislation which acts as the foundation of all communications orientated rules and precedents in the US. One clause dictates a state is entitled to draft its own rules, assuming it does not contradict that of the federal government. This is the very scenario which California has crafted. If SB 822 is allowed to stand it undermines the whole Communications Act; who is to say other states, businesses or advocacy groups could not use this example as a means to ignore other clauses, aspects of the Communications Act or precedent which has been set. In legalising the contradiction, the risk is to undermine the very basis of the communications industry across the country.

With California retaliating against the FCC’s decision to reverse net neutrality, the consequences are much more significant than they appear on the surface. This is now much more than a battle of technology regulations.

Google attempts damage control on privacy regulations

Google has unveiled its ideas on the regulatory framework of tomorrow in what looks like an attempt to influence legislation and restrict the long-arm of government intervention.

On the whole, the internet players of Silicon Valley have largely been left to do what they want. This is not to say there are no regulations or consumer protections, but the breadth and depth of regulatory red-tape is no-where near the same scale as the telco industry. In airing its ideas on what the regulatory environment of the data economy should look like, Google is seemingly trying to maintain this status quo.

“Today, we’re sharing our view on the requirements, scope, and enforcement expectations that should be reflected in all responsible data protection laws,” said Keith Enright, Chief Privacy Officer at Google. “This framework is based on established privacy frameworks, as well as our experience providing services that rely on personal data and our work to comply with evolving data protection laws around the world.”

The three page document, which you can see here, is largely what you would expect from one of the internet players. Commitments to collect data responsibly, transparency for the user, limitations on collection and usage, offering control to the user, accountability of third-parties and interoperability are all aspects, but this is not what the helpful commentary is about. This is not about protecting the user, it is about Silicon Valley maintaining control of its own destiny.

With the US Department of Commerce’s National Telecommunications and Information Administration evaluating new legislation, the Senate about to start grilling tech executives and the White House preparing meetings with industry, the future is clear. The US Government intends to take a firmer grasp of activities in Silicon Valley, offering a more stringent rulebook and more protections to the consumer. This is not good news for the internet players.

To date, the internet players have made fortunes in the grey areas. There are more freedoms to use personal information and create advertising solutions as these are organizations which have slipped between the regulatory cracks. They have resisted the same rules as telcos, much to the frustration of the traditional communications industry, though this is not necessarily a bad thing. These are different types of businesses, applying the same rules as telcos is the square-peg-round-hole situation. These are businesses which are creating new services and innovating with data in ways some could not imagine, and need the flexibility to do so. That said, they should still be held accountable to regulation.

In releasing its ideas, Google is seemingly practising its own version of damage control. If new rules are on the horizon they’ll need to be influenced. A number of these practises are already in place at Google, meaning the business can continue to generate billions without a huge disruption to operations. That cannot be said its neighbours in Silicon Valley, but this is of little concern to the Do-No-Evilers.

Another interesting aspect to this announcement is perception. The industry has been hit hard by privacy scandals over the last few months, the Facebook/Cambridge Analytica saga is the biggest example, though Google has been collecting location data on users who have opted-out; it is far from innocent. In making these suggestions public, Google is putting a friendly face back onto the brand; its helping with the data privacy issue, not compounding it, will be the PR message here.

While this perception of helpfulness will help with its consumer reputation, it will also aid its grilling from the Senate. Enright is one of several executives who have been summoned to testify in front of several politicians to discuss how social media companies work and data privacy is secured. In demonstrating proactive enthusiasm prior to the grilling it might gain some much needed favour after Google left its chair empty during the Senate Intelligence Committee testimony.

The wild-west internet is slowly being swallowed up by the steady progress of regulation. The rules will never get in front of technological advancements, but to protect its billions, Google and its Silicon Valley neighbours will have to put on big smiles to influence rule makers.

US contemplates its own version of GDPR

The U.S. National Telecommunications and Information Administration has started a 30-day public hearing process to gather comments on its policy options towards consumer privacy protection.

Shortly after Europe’s General Data Protection Regulation (GDPR) came into force in late May, “a global tidal wave of new and updated privacy regulations” have followed hot on the heels of GDPR as it was called at the recent Digital Futures conference (see the picture). Regulations and laws passed in jurisdictions from India to California with other markets in between have largely modelled after the European legislation.

In the latest move, on Tuesday September 25, the US federal government, through the National Telecommunications and Information Administration (NTIA), kick-started a month-long process to hear from the public on the approach towards privacy protection.

“The United States has a long history of protecting individual privacy, but our challenges are growing as technology becomes more complex, interconnected, and integrated into our daily lives,” said David Redl, NTIA Administrator and Assistant Secretary of Commerce for Communications and Information. “The Trump Administration is beginning this conversation to solicit ideas on a path for adapting privacy to today’s data-driven world.”

The feedback requested is two-fold. The first part is on the outcome of any future privacy legislation. This includes:

  • Organizations should be transparent about how they collect, use, share, and store users’ personal information.
  • Users should be able to exercise control over the personal information they provide to organizations.
  • The collection, use, storage and sharing of personal data should be reasonably minimized in a manner proportional to the scope of privacy risks.
  • Organizations should employ security safeguards to protect the data that they collect, store, use, or share.
  • Users should be able to reasonably access and correct personal data they have provided.
  • Organizations should take steps to manage the risk of disclosure or harmful uses of personal data.
  • Organizations should be accountable for the use of personal data that has been collected, maintained or used by its systems.

All these are rather similar to what GDPR and the up-coming e-Privacy regulation are designed to achieve.

Meanwhile the NTIA is also requesting comments on the overall “High-Level Goals for Federal Action”, the key points including:

  • “Harmonize the regulatory landscape” between existing and future legislations;
  • “Legal clarity while maintaining the flexibility to innovate” to enable new business models and technologies while privacy is protected;
  • “Comprehensive application” to “all private sector organizations that collect, store, use, or share personal data in activities that are not covered by sectoral laws”;
  • “Incentivize privacy research” in technologies and services that improve privacy protections.
  • FTC should be the enforcement agency

However a few other points stand out that deserve a closer look. One probably deserves a full quote:

Employ a risk and outcome-based approach.  Instead of creating a compliance model that creates cumbersome red tape—without necessarily achieving measurable privacy protections—the approach to privacy regulations should be based on risk modeling and focused on creating user-centric outcomes.  Risk-based approaches allow organizations the flexibility to balance business needs, consumer expectations, legal obligations, and potential privacy harms, among other inputs, when making decisions about how to adopt various privacy practices.  Outcome-based approaches also enable innovation in the methods used to achieve privacy goals.  Risk and outcome-based approaches have been successfully used in cybersecurity, and can be enforced in a way that balances the needs of organizations to be agile in developing new products, services, and business models with the need to provide privacy protections to their customers, while also ensuring clarity in legal compliance.

NTIA’s focus is clearly to avoid heavy-handed measures to regulate what can be done, but rather giving flexibility to businesses to make their own judgement what measures to take. This is also in the same spirit as the first part of the consultation which is “focuses on the desired outcomes of organizational practices, rather than dictating what those practices should be.”

Another point that draws our attention is related to “Scalability”, which stresses that small companies operating in good faith, and 3rd party processing data on behalf of other organisations should be treated differently from big companies that own and control personal data.

The two points above combined make a balanced message for the internet giants, which are not necessarily the biggest fans of privacy regulations. While they are afforded more flexibility, they are also going to be treated more strictly if they contravene. However as we wrote earlier, because of their size, the Googles and Facebooks of the world are much quicker in ticking the compliance boxes.

One more point that worth highlighting, probably for entertainment purposes than anything else, relates to “Interoperability” with other major global legislations. Here, for whatever reason it pointedly does not refer to GDPR but uses the example of “APEC Cross-Border Privacy Rules System.”

In general, the NTIA’s approach is balanced and measured, which is largely in line with our attitude towards privacy protection. On one hand we deplore the blatant abuse of privacy by companies like Facebook and Cambridge Analytics. On the other hand, we also sympathise with the small and medium-sized businesses operating in Europe, most of which had to scramble some policies at the eleventh hour, but may still fall foul of consumers. France’s private data protection agency CNIL (Commission nationale de l’informatique et des libertés) registered a 64% increase in consumer complaints after GDPR came to force over the same four months last year.

As Mary Meeker highlighted, draconian laws could limit the exploratory nature of tech innovators. That many countries model their privacy legislation after GDPR confirmed that Europe’s policymakers are “world-class in setting standards”, as a recent article in The Economist put it. But in the same article the newspaper also highlighted the gap between Europe and the AI leaders, China and US, neither of which is role model in guarding individual privacy, though for entirely different purposes.

In a recent online poll, a third of the respondents agreed with the statement that there should be “flexible rules to allow users to trade privacy for benefits”. An optimal regulatory environment should give this minority group the freedom to do so while providing the other two third consumers with strict privacy protection.

Senator floats new ideas for US regulation, criticizing inability to adapt

Democratic Senator of Virginia Mark Warner and his staff have penned new ideas for the US technology regulatory environment, pointing the finger at inadequacies and weaknesses in the current system.

The paper, first seen by Axios, puts forward a twenty-point plan for fighting online disinformation on social media, while also suggesting new rules which sound somewhat similar to recent GDPR. The ideas will unlikely be welcomed by the big boys of the technology world who, on the surface, preach the benefits of consumer privacy, but have been battling the consequences of regulatory changes on the advertising spreadsheets.

“The speed at which these products have grown and come to dominate nearly every aspect of our social, political and economic lives has in many ways obscured the shortcomings of their creators in anticipating the harmful impact of their use,” the paper reads. “Government has failed to adapt and has been incapable or unwilling to adequately address the impacts of these trends on privacy, competition and public disclosure.”

Fake news and disinformation is of course a dominant feature of the paper, it is a political hot potato at the moment, but in addressing consumer privacy, Warner is perhaps taking an unusual stance for a US politician. Many politicians in the European markets are sensitive to privacy and data protection, but this is not an overwhelming trend in the US unless there are PR points to win. The Cambridge Analytica scandal highlighted the shallowness of point-scoring politicians, but also the inability for rule-makers to understand the digital economy. The ‘Senator, we sell ads’ comment from Facebook CEO Mark Zuckerberg will not be forgotten easily.

But in Warner, privacy advocates might have found an ally. Warner is a regular critic of the technology industry and the apparent abuses/shortcomings of the companies which profit so readily from the freedom embedded in social media. The stalking of consumers online is an example Warner cites, admitting there are benefits though a lack of education on how the digital economy actually works has created a naïve user;

“Users have no reason to expect that certain browsing behaviour could determine the interest they pay on an auto-loan, much less what their friends posts could be used to determine that,” Warner notes.

Warner’s plan is to encourage transparency. For fake news, this could mean stating the origin of the news or labelling bots. It is an interesting idea, but due to the pace of development in AI and the effectiveness of VPN’s these could be very difficult objectives to achieve. Should such ideas make their way into policy and legislation, it would present a massive headache to the internet giants. Making these platforms liable for any disinformation should also be a huge worry.

Another idea is that of ‘information fiduciaries’. Originally proposed by Yale Law Professor Jack Balkin, certain services providers should be held to greater level of accountability because of the user dependence on their, such as search engines, and should pledge to not utilise or manipulate data for the benefit of the platform or third-parties. This sounds like a very interesting idea, but considering the US is a country defined by capitalism, Warner will struggle to get mainstream support here.

The final area we would like to address is the suggestion of new regulations which mirror GDPR in Europe. This is one which will likely receive a significant amount of attention for lobbyists, as anyone who was involved with making organizations GDPR-ready will know the heartache which was felt. Facebook is one company which pointed towards GDPR as a reason for less than favourable financial results, therefore the suggestion of bringing these rules across the Atlantic will surely be a kickstart to the lobby machine.

The ideas presented by Warner are wide-ranging, and in fairness, the cons are discussed in detail. These are not hard recommendations for the future regulatory-framework of the US, but ideas which need to be assessed. The US is not alone in its inability to effectively and fairly regulate the technology industry, or protect the consumer, but conversations do not seem to be taking place to understand how rules need to be adapted.

As mentioned before, Zuckerberg’s simple explanation of how Facebook makes money to Senator Orrin Hatch highlights one of the more worrying aspects of government today; the people supposedly in charge do not understand the basic concepts of the digital economy. The shortcomings are very apparent, and something needs to be done to ensure growth of the industry does not come at the expense of the consumers experience, safety or privacy.

Warner’s ideas will probably be received as extreme, but it should serve a good purpose; the conversation will be taken forward.

Indian report on data protections leave consumers open to abuse

The Indian Government has released a paper to address the inadequacies in data protection and privacy legislation, proposing some ‘interesting’ exemptions, to leave the matrix open to abuse.

The purpose of the paper is simple; assess an area of the Indian digital economy which is under-developed, and make the relevant recommendations. It is an investigation which has been burrowing away for months, and follows a global reaction to some very public data abuses. The report is adequately timed, and should provide a framework to protect the Indian consumer as the world becomes increasingly connected. That is the theory of course.

As you would expect, there are some very good things in the report. There are restrictions of what personal information can be gathered by the internet companies, large and small, while justification needs to be present. It seems the purpose is to address the wild-west approach to the data economy across the country, with information being collected for ‘clear, specific and lawful’ purposes. Like GDPR in the European markets, it seems the purpose to provide some restrictions of the free-flowing and potentially-abusive relationship between the internet giants and the consumer.

Other interesting aspects include the right to be forgotten, perhaps giving the consumer more ownership over their own personal information, explicit opt-in consent for certain categories of data (that which is deemed sensitive), and also data localisation. The investigators do seem to have leant on lessons learned in Europe with GDPR, but then localization laws could be deemed a bit more nefarious.

This is the suspect part of the report; there seem to be a number of exemptions to any potential new laws for government agencies and offices. Data maybe processed without consent or knowledge if this is considered necessary for any function of Parliament or the State. The language is hazy and ill-defined, allowing plenty of wiggle-room. The whole situation creates an opportunity for abuse, and we have seen on numerous occasions around the world, governments can rarely be trusted to act without accountability.

Lazy definitions and localised data residency will leave some of the larger players in the digital economy in an dubious position. Resistance to requests for information, or appeals to courts, would have to be made locally in India. Some interest companies can resist government requests due to the way data is stored, think about Microsoft’s battle with the US government over information stored on one of its Irish servers, theoretically adding an extra layer of protection to the consumer. This set up would potentially leave the Indian consumer quite open to abuse.

For Save Our Privacy, an Indian data protection advocacy group, poor definitions and guidance are not the only concerns; Indian spooks are getting too much freedom as well.

“There is a dire need for surveillance law reform in India,” the group said in a statement. “It was our hope that this effort would provide a comprehensive framework overhauling surveillance and interception in India – in consonance with the international standards on necessary and proportionate principles, along with providing proper judicial scrutiny. However, the report and bill does not seem to provide substantive changes in the surveillance regime in India.”

The need to address data protection and privacy laws is clearly evident throughout the world. Numerous economies are still reliant on regulation and legislation written for another era, think about how much society has changed over the last 5 years. Any attempts to create an environment suitable for today’s digital normality should be applauded, but the Indian government has not got this one right.

Governments have shown they cannot be trusted with un-monitored or un-accountable access to data and communications networks. The recommendations in this report, notably focusing around government exemptions, are too loosely defined, making the opportunity for abuse abundant. This cannot be a situation which is allowed to develop.

UK Gov is the biggest hurdle to infrastructure rollout – report

A report from law firm Herbert Smith Freehills has highlighted industry concerns that the UK Government is proving to be more hindrance than assistance for the rollout of future-proofed infrastructure.

While it might come as little surprise to some, the government is proving to be a clunky machine, with policy frameworks and regulations the main reason for the stuttering rollout of full-fibre and 5G networks across the UK. And this is not just the opinion of a bureaucracy-bashing hater, 50% of the audience at a recent Herbert Smith Freehills event agreed with the statement. There are other factors which are slowing down progress, but the government is the biggest hurdle.

“When you look at what happens in other countries they have taken much bolder decisions about regulation,” said Emily Clark, Chief Economist at BT. “In countries like Spain and Portugal – where there is a lot more FTTP – they’ve tended to step back from regulation like VULA in order to really drive incentives for rivals to invest.

“And in other countries they’ve actually stepped back from competition and said what we’ll do is create a very stable and predictable regulatory framework around the single national provider and that has also worked very well.”

The problem which the UK is facing is few positive decisions have actually been made. Policy frameworks and regulation have seemingly followed a similar path to the decisions of yesteryear. This is a huge issue as there is very little to compare the communications market of the 90s to what the beast has evolved to today. There are new modes of communication, software is arguably more important than hardware, the ecosystem has expanded and the role of digital in our lives is becoming increasingly more prominent. The game has changed, therefore the rules have to.

While this adaptation is a point which has been discussed for many years, the difference between preaching and action has been quite profound.

“There’s been somewhat of a mismatch between Government’s enthusiastic rhetoric to get as much infrastructure based competition as possible in to the UK market and some of the policy decisions we’ve seen emerge,” said Dan Butler, Head of Public Affairs and Policy at Virgin Media.

Specifically, Butler is referring to increases in business rates, wholesale price controls on superfast broadband and also the rejection by government of BT’s offer to voluntarily invest up to £600 million to deliver 10 Mbps broadband to 99% of the UK by 2020. These policies are not necessarily consistent with the government position on assisting the development of the industry, but it wouldn’t be the first time PR appeasement pleas are flouted to the press promising progress and reform, only for the public sector machine to continue on the same mundane box ticking mission.

“We hope that the DCMS (Department for Digital, Culture, Media & Sport) Future Telecoms Infrastructure Review will be a vehicle for more policy consistency and to solve some of the genuine supply-side barriers to build, which are wayleaves and getting broadband in to new developments,” said Butler. “And Government should implement policy which stimulates demand for ultrafast broadband – through voucher models, and encouraging people for whom there might be an economic barrier to move to high speed broadband.”

The Future Telecoms Infrastructure Review has been in the works for a couple of months now, as part of the wider Industrial Strategy, though there don’t seem to be many indications it will come to an end any time soon. The aim is to assess whether any additional policy interventions are needed to create the conditions for long term investment in world-class digital connectivity, though many in the industry are seemingly calling for a more light touch approach.

With the UK about to leave the single market, there is bound to be bigger changes on the horizon. Secretary of State Matt Hancock seems to be indicating there will be greater intervention in the post-Brexit world, while Labour Leader Jeremy Corbyn has pointed towards renationalisation of Openreach as a wholesale, open-access provider. Whether the right approach is currently under consideration remains to be seen, but one thing is clear from the feedback; something needs to change.

‘Double Irish’ and ‘Dutch Sandwich’ loopholes save Google billions in tax

Apple might have gotten the majority of the European Commission’s attention for ‘creative’ accounting strategies, but Google is not innocent after shielding €16 billion from the tax man.

Over the course of 2016, the internet search giant saved itself as much as €3.7 billion by moving cash between various shell organizations in Ireland, the Netherlands and Bermuda. According to Bloomberg, Google is making use of various structures in Ireland and the Netherlands, known as ‘Double Irish’ and ‘Dutch Sandwich’ respectively, to duck and dive around the tax man.

Such tax strategies have become infamous over the last couple of years, as Silicon Valley giants reap the benefits of the shifting digital economy in various countries without paying (or a substantially smaller amount) local taxes. Many of these loopholes have now been closed, though the tech giants are free to continue using the ‘Double Irish’ structure until 2020.

Essentially, the strategy breaks down like this; advertising revenues from various countries in Europe is collected in Ireland (where there is a lower corporation tax), before being immediately shifted to a Dutch subsidiary, where it is held. The revenue is then eventually shifted onto another shell organization in Bermuda, a subsidiary of the Irish business, where it is reported. Google is finding tax relief in some countries as there isn’t a physical presence. This is certainly the case in France, where it won a legal battle over roughly €1 billion recently.

€3.7 billion could have been saved on €15.9 billion in revenues over the course of 2016, a 7% increase on the 2015 figures. Considering the growth which Google has been experiencing over the course of 2017, Q3 saw a 24% year-on-year jump for total revenues, it shouldn’t surprise many if this number was larger for the last 12 months.

Of course, Google has released a statement where it has said it complies will all local tax laws and regulations, though the question at whether this is an ethical way to do business in international markets still lingers.

While this is a common practise for international businesses, it could all be set to change over the next couple of months. With the introduction of President Trump’s new tax laws, companies like Google could see lower tax bars on overseas profits. The move has been made by the Commander-in-Chief to encourage the repatriation of profits, and hopefully investment in the US. That said, few organizations have made any substantial, concrete commitments to reinvest in the domestic market.

Perhaps it would surprise few if organizations such as Google move the cash back to take advantage of tax relief, before moving elsewhere when a better deal is available. President Trump seems to be putting a lot of faith into these organizations, few of which have demonstrated any precedent for really caring that much outside of the spreadsheets. These are the most profitable businesses on the planet for a good reason after all.

UK Gov attempts to modernise telco law with new hire

The UK Government is advertising a new position to ensure telco legislation is modernised following Brexit; knowing about the telco industry is not necessary though.

The new position, Head of Telecoms EU Exit Policy and Legislation, will be located in the Department for Digital, Culture, Media & Sport, and will be responsible for running a team of six, with the mandate of modernizing the legislative environment for the telco industry. Part of this will include translating the European Electronic Communications Code into British.

As you would expect for such a complex and ever-evolving, the perfect candidate would have years of experience in the TMT space, with a firm grasp on current and future trends. Or maybe not. ‘Knowledge of telecoms would be welcome but is not essential’ according to the job description.

Perhaps we have discovered why the UK government finds it so hard to effectively regulate the current telco environment, as well as writing rules which offer freedom to be creative for the future digital environment; it isn’t necessarily hiring people who know the industry.

The telco industry has been the subject of much disruption over the last few years, directly influencing the fortunes and failures of other segments as well. Considering digital will form the foundations of any and all successful businesses in the future, the importance of suitable legislation, which is adaptable enough for future change but stringent enough to ensure accountability today, cannot be underplayed. This will be an immensely complicated, and of course, a thankless job but the best way to safeguard success would surely be to hire someone who knows the industry inside-out.

Of course, the new Head of Telecoms EU Exit Policy and Legislation should not be blamed. Some might argue the inappropriate appointment of individuals rises right to the top of the pile. Take our Minister of State for Digital and Culture Matt Hancock as an example.

Hancock briefly worked for his family’s computer software company, before finding employment as an economist at the Bank of England, specialising in the housing market. He then moved onto becoming an economic adviser to the Shadow Chancellor of the Exchequer George Osborne, before being elected as an MP. During his time as an MP, Hancock’s work has focused on social housing, skills and energy, before being appointed to his current position.

Again, it would be unfair to blame Hancock for his rise to his current position as he is a career politician specialising in handshakes, smiles and PR quips, but unfortunately he does not seem qualified for the role. We’re sure he is a perfectly charming and intelligent individual, but working for his family’s software business, during a period which is incomparable to the current digital landscape, does not provide enough experience to make him a suitable leader for the UK’s grand digital ambitions.

Some might also point out that the role of an MP is to surround themselves with experts and collect as many opinions as possible. This is a reasonable thing to assume, but if the Minister of State for Digital and Culture (who has no or little experience in telco) is being advised by a Head of Telecoms EU Exit Policy and Legislation (who has no or little experience in telco), there might be a problem. What we have is a failure in the system, and individuals who don’t plan on sticking around long enough to fix it.

The position is still open for applications, so we do hope there are a few candidates with an appropriate level of experience in the telco space applying. That said, we remain pessimistic considering the government’s ability to make a glorious mess of most things associated with progress and creative thinking.

If you do fancy applying for this position, we’ve copied some of the other essential criteria with our take on what the descriptions actually mean.

  • Seeing the big picture (As long as not looking past end of current government)
  • Delivering at pace (Ignoring public sector tendencies, you don’t have long so work fast)
  • Collaborating and partnering (Ignoring the UK’s divorce from EU)
  • Leading and communicating (Through documents which are at least 25,000 words and incomprehensible to the general public)
  • Making effective decisions (Ignoring UK Government tendencies, you don’t have long so made good choices)