Monthly Archives: June 2021

The giant US tech firms known as the Silicon Six have been accused of inflating their stated tax payments by almost $100bn (70bn) over the past decade.

As Chancellor Rishi Sunak called on world leaders to back a new tech tax ahead of next weeks G7 summit in the UK, a report by the campaign group Fair Tax Foundation singled out Amazon, Facebook, Googles owner, Alphabet, Netflix, Apple and Microsoft.

It said they paid $96bn less in tax between 2011 and 2020 than the notional taxation figures they cite in their annual financial reports. .

The six firms named handed over $149bn less to global tax authorities than would be expected if they had the paid headline rates where they operated, Fair Tax Foundation said.

Multinationals exploit gaps and mismatches in the international tax system through a technique known asprofit-shifting. This involves artificially allocating sales derived in one country to a lower-tax country. One of the ways this is achieved is by companies setting up a subsidiary in a tax haven and registering their intellectual property there. That entity then charges the companys subsidiaries in other, higher-tax jurisdictions large royalty fees. By charging that cost to the market where the majority of revenues are made, profits can be reduced or eliminated, meaning no tax is paid. The royalty fees extracted in this way are booked as profit in the low-tax location. Profits are often shifted to countries such as the British Virgin Islands or Bermuda, which charge no corporation tax.

Tax abuse by multinationals and avoidance by rich individuals costs countries around the world$427bn a year in lost revenues, according to research by the Tax Justice Network campaign group. The UK is estimated to lose 25bn of tax income due to profit-shifting.

Proposals for a minimum global tax rate and allocating taxing rights based on where companies make their money rather than whichever low-tax zone a firm chooses to book its profits would help to end the race to the bottom where one nation slashes tax to attract business only to be outdone by another country. Such a plan would give governments greater certainty on revenue raising.

There are two key strands of the plan for a minimum global corporation tax, broadly following the work of the OECDs pillar one and pillar two blueprints for global tax reforms set out in October.

Under pillar one, taxing rights would be granted to a portion of a multinationals profits based on where its customers reside, irrespective of the companys physical presence in that location. That might include a threshold that would mean this captures the worlds 100 biggest multinationals but not smaller companies.

Under pillar two, governments would still be able to set whatever local corporate tax rate they wanted. But as part of a global minimum rule, if companies paid lower rates in a particular country their home governments could claim top-ups to the agreed tax floor, eliminating the advantage of shifting profits to a tax haven.

Richard Partington

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Overall, they paid $219bn in income tax over the past decade, 3.6% of their total revenue of more than $6tn. Income tax is paid on profits, but the researchers said the Silicon Six companies deliberately shift income to low-tax jurisdictions to pay less tax.

Based on companies regulatory filings, the report found that Amazon, the internet retailing and cloud services provider run by the worlds richest man, Jeff Bezos, collected $1.6tn of revenue, reported $60.5bn of profit and paid $5.9bn in income taxes this decade. Amazon would have been expected to pay $10.7bn in taxes on those profits based on international tax rates, the report said. The tax paid as a percentage of profit was just 9.8% over the period 2011-20, the lowest of the so-called Silicon Six.

An Amazon spokesperson disputed the calculations as extremely misleading. Amazon is primarily a retailer where profit margins are low, so comparisons to technology companies with operating profit margins of closer to 50% is not rational, the company said. Governments write the tax laws and Amazon is doing the very thing they encourage companies to do paying all taxes due while also investing many billions in creating jobs and infrastructure. Coupled with low margins, this investment will naturally result in a lower cash tax rate.

Paul Monaghan, chief executive of the Fair Tax Foundation, said the groups analysis provided solid evidence that substantive tax avoidance is still embedded within many large multinationals and nothing less than a root-and-branch reform of international tax rules will remedy the situation.

Monaghan said US government proposals to reform the global tax system by imposing a minimum 15% corporation tax rate could help end big companies profit-shifting to tax havens.

The plan could be given the green light ahead of the G7 summit in Cornwall next month, according to Treasury sources.

Chancellor Rishi Sunak has said he wants President Joe Bidens administration to sign up to a tech tax deal at the same time. The right companies arent paying the right tax in the right places, he told the Mail on Sunday. Thats not fair and thats something that I want to fix.

Monaghan said Bidens tax plans had lit a fire beneath the international debate on tax.

The Biden-Harris proposals would see many of the incentives underpinning profit-shifting to tax havens removed, and would see the very largest multinationals taxed not just on where subsidiary profits are booked, but where real economic value is derived.

Monaghan said global agreements on tax would have a seismic impact on the likes of Amazon, Apple, Facebook, Google and Microsoft, with billions of additional taxes paid across the world.

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Facebook, run by Mark Zuckerberg, who has a personal fortune of $123bn, has paid just $16.8bn in income taxes this decade, despite making profits of $133bn and revenues of $328bn, according to the report. The tax paid as a percentage of profit was just 12.7%, the second-lowest of the so-called Silicon Six after Amazon.

A Facebook spokesman said: All companies pay tax on their profits, not revenues. Last year we paid $4.23bn in corporate income taxes globally, and our average effective tax rate over the last 10 years was 20.71%, which is roughly in line with the OECD average.

Alphabet, Apple, Netflix and Microsoft either declined to comment or did not respond to requests for feedback.

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Silicon Six tech giants accused of inflating tax payments by almost $100bn - The Guardian

A contractor said this week it is restoring holiday pay to Facebook Inc. janitors after questions from MarketWatch about why hundreds of workers lost more than half their paid holidays during the COVID-19 pandemic.

Facebook FB, +1.29% janitors who kept their jobs but worked sporadically throughout the coronavirus pandemic went back to full-time, on-site work in April as the social media giant began to open its offices with limited capacity. Although several janitors said they are grateful to still be employed, they wondered why they had lost some perks, specifically a half-dozen paid holidays.

Like many other hourly workers at large companies in Silicon Valley and elsewhere, the janitors do not work for Facebook directly, but are employed by a contractor. In this case, the contractor is ABM Industries Inc. ABM, +0.67%, which sent janitors at Facebooks Menlo Park, Calif., campus a letter around Thanksgiving informing them that they would be paid for only five holidays a year effective December 2020, the minimum required in their union contract and down from the 11 days previously offered.

The memo, reviewed by MarketWatch, suggested the change was ordered by Facebook: While Facebook has been generous enough to pay everyone since March throughout this pandemic, they have made some changes. It was signed by Samantha Rivera, human resources manager for ABM at Facebook. Per the client, CWs [contingent workers] will no longer observe all Facebook holidays, she wrote.

We were left scratching our heads at such a dramatic change, especially after all the generosity Facebook has shown us throughout the years, janitor Adelina Valdez, who has worked at Facebook for about five years, told MarketWatch.

Facebook also said it was confused. A Facebook spokeswoman said the company has not asked any of its vendors, including ABM, to revoke any paid holidays, and added that the company pays all its contractors or vendors to provide their workers with 15 paid holidays a year, though the allocation of those days is up to the contractor. Facebooks nationwide policy of providing those paid days off had not changed, she said.

Facebook was one of the Silicon Valley tech giants that promised to keep paying its service workers throughout the pandemic, even as their campuses were mostly closed. That move fits in with a yearslong effort by some tech companies to improve conditions for service workers after pressure from full-time employees and others.

See: How long will the Silicon Valley employees who cant work from home keep getting paid?

Through several days of email exchanges with MarketWatch, ABM would not explain the discrepancy between what the janitors were told about who canceled the paid vacation days and Facebooks statements. A spokeswoman for ABM said the company continues to provide employees the full amount of paid holidays in alignment with [the collective bargaining] agreement, our contract with Facebook which requires we provide at least 15 paid days off to employees (which remains unchanged), and as part of our commitment to support the well-being of our team members.

But Valdez and several other Facebook janitors told MarketWatch that their ABM supervisors had asked them to use their vacation time if they wanted to be paid for certain holidays, including the recent Memorial Day holiday, plus Christmas Eve, New Years Eve and other holidays for which they once got paid.

Last Wednesday, MarketWatch asked Facebook questions about the paid holidays that had been revoked from janitors. The following day, MarketWatch also asked ABM for comment about the matter. According to Valdez and other janitors in contact with MarketWatch, ABM then told them that same day that they would be getting paid for Memorial Day after all.

Why would they pay [us for the holiday] at the last minute? one janitor, who has worked at Facebook for about three years and asked not to be named out of fear of reprisal, asked MarketWatch. It makes you wonder.

The ABM spokeswoman would not answer additional specific questions, but janitors received another memo from ABM on Thursday night that announced the contractor was canceling the reduction of paid holidays it announced last year and rescinding its contention that Facebook had sought the change.

Following discussions between ABM and SEIU-USWW, those changes will not be implemented, and the issue is resolved, the letter, which was on ABM letterhead and reviewed by MarketWatch, said. ABM will initiate actions to address any discretionary holiday pay issues. The letter explicitly stated that ABM made the decision, and that Facebook did not initiate the changes.

We apologize for any confusion about this, said the last sentence of the letter, which was not signed by a person but simply by ABM. ABM representatives had yet to respond Friday to requests to confirm the details.

The janitors were encouraged by the news, they told MarketWatch on Thursday night. But another janitor who asked not to be named said, There was no confusion whatsoever. They stated the client, aka Facebook [in the first letter]. Hopefully they are exposed for what they did and who they are.

We have been asking about this issue for months. In a few days after you asked them questions, they changed their mind, Valdez told MarketWatch.

Read: Facebook suspends Trump for at least two years

Another janitor said it remains to be seen whether ABM will follow through. So far, because of the changes announced in November, the janitors have not received holiday pay for Christmas Eve and New Years Eve 2020, as well as Martin Luther King, Jr. Day and Presidents Day this year.

Facebook said Friday it was aware of ABMs letter but had no comment about the contractors about-face, and said it continues to investigate the issue. A spokeswoman said the company wants to ensure the janitors are being treated fairly, and that contractors adhere to Facebooks policy of providing 15 paid days off.

Denise Solis is a vice president for the Service Employees International Union United Service Workers West, which represents about 300 janitors at Facebooks headquarters. She said the union has been talking with ABM since the changes were announced in November, and that the union had also been told that Facebook had ordered the changes.

There is a complicated dynamic when there are layers of subcontracting of essential services that ultimately leaves the workers in by design low-wage industries vulnerable and left holding the short end of the stick, Solis said Friday. As a union that represents workers in low-wage industries of immigrant and diverse BIPOC and working-class communities, we are constantly pushing on this dynamic to organize workers into having the collective power to be seen and valued.

A third company, Hines, which is the property manager for Facebook and manages the ABM account, did not return repeated requests for comment.

ABM had 114,000 employees, 32% of whom are covered by collective bargaining agreements, as of October 2020, according to its most recent annual filing with the Securities and Exchange Commission. ABM workers provide janitorial, parking, airline and other facility services, such as building maintenance.

According to ABMs filing, the pandemic has had, and will likely continue to have, an adverse impact on our consolidated financial position, results of operations, and cash flows. To preserve liquidity, the company said it instituted pay cuts or reduced hours for certain employees and managers temporarily but restored full pay last August. We have also actively managed direct labor and related personnel costs, including: imposing furloughs or reduced hours for certain service employees in markets significantly impacted by business slowdowns and shutdowns, ABM also said.

A years-long class-action lawsuit filed against ABM over workers pay for meal periods, split-shift premiums and reimbursement for travel is set to go to trial in July in San Francisco Superior Court. The company is also facing several other lawsuits in different states over allegations involving sick days, underpayment of overtime and unpaid wages.

Meanwhile, other contract workers at Facebook, including those at different locations, have not seen changes in their paid holidays, according to pay stubs seen by MarketWatch and union leaders who represent workers at the companys other offices.

This issue [seemed] unique to this location, Solis said. She said the union was not aware of any similar issues at Facebooks satellite offices elsewhere in the Bay Area, which have about 90 janitors that are employed by other contractors, not ABM.

Ted Waechter, spokesman for Unite Here Local 2 in San Francisco, and Sarah McDermott of Unite Here Local 19 in Silicon Valley said they are not aware of any changes to workers pay or benefits, either. The two local unions combined represent more than 1,000 Facebook cafeteria workers, who continue to be on paid furlough.

Stacy Murphy, a business representative for Teamsters Local 853, which represents many of the Bay Areas tech-shuttle drivers, said Facebooks shuttle drivers are also still on paid furlough and have not seen any changes to their pay or benefits.

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Contractor slashed Facebook janitors paid holidays and blamed the tech giant, but reversed course after questions - MarketWatch

Bolstering demands for a global minimum tax to rein in corporations' evasive tactics, a new analysis released Monday showed that a half dozen Big Tech companies based in the United States paid almost $100 billion less in taxes over the past decade than stated in their annual reports.

Between 2011 and 2020, Amazon, Facebook, Alphabet (the owner of Google), Netflix, Appleand Microsoft known as the "Silicon Six" paid roughly $219 billion in income taxes, which amounts to just 3.6% of their$6 trillion-plus in total revenue,according tothe Fair Tax Foundation. Income tax is paid on profits, not total revenue, and researchers said these tech giants are adept atreducingtheir tax liabilities by shifting profits to offshore tax havens.

Had the "Silicon Six" paid the prevailing tax rates in the countries where they operate, they would have given global tax authorities over $149 billion more than they did over the past decade, researchers said. Moreover, not only did these corporate behemoths fork over nearly $150 billion less than would be expected under a stronger international taxation regime, but they also inflated the value of the tax payments they did make.

According to the Fair Tax Foundation, these six companies reported paying approximately $315 billion in income taxes between 2011 and 2020, which is 23.2% on nearly $1.4 trillion in profits. That's significantly higher than the 16.1% rate the companies actually paid over the past decade, however, resulting in a gap of more than $96 billion between tax figures cited in annual financial reports and real contributions to public revenues.

Paul Monaghan, chief executive of the U.K.-based nonprofit,saidthe study provided "solid evidence that substantive tax avoidance is still embedded within many large multinationals and nothing less than a root-and-branch reform of international tax rules will remedy the situation."

None of the six corporations "is an exemplar of responsible tax conduct," the report noted. "However, the degree of irresponsibility and the relative tax contribution made does vary. Amazon has paid just $5.9 billion in income taxes this decade, whilst Apple has paid $100.6 billion and Microsoft has paid $55.3 billion."

The Fair Tax Foundation identified Amazon and Facebook as the worst offenders, prompting responses from the two tech giants.

AsThe Guardianreported:

AnAmazonspokesperson disputed the calculations as "extremely misleading."

"Amazon is primarily a retailer where profit margins are low, so comparisons to technology companies with operating profit margins of closer to 50% is not rational," the company said. "Governments write the tax laws andAmazonis doing the very thing they encourage companies to do paying all taxes due while also investing many billions in creating jobs and infrastructure. Coupled with low margins, this investment will naturally result in a lower cash tax rate." ...

A Facebook spokesman said: "All companies pay tax on their profits, not revenues. Last year we paid $4.23 billion in corporate income taxes globally, and our average effective tax rate over the last 10 years was 20.71%, which is roughly in line with the OECD average."

In response to the corporations' complaints, the Fair Tax Foundation said that the majority of Amazon's profits in the last three years were derived not from retail but from cloud services, where profit margins are between 25 and 30%. The Fair Tax Foundation also noted that over the past decade, Facebook paid an income tax rate of just 12.7%, resulting in substantially lower contributions than would be expected according to prevailing corporate tax rates as well as the company's effective tax rate.

The Fair Tax Foundation's new analysis comes just weeks after IRS Commissioner Charles Rettigadmittedthat tax dodging is depriving the U.S. government of as much as $1 trillion or more per year.

Monaghan said that Treasury Secretary JanetYellen's recentpushfor a global minimum tax on corporations "[lit] a fire beneath the multilateraldiscussions that have been slowly progressing under the auspices of theOECD."

According to Monaghan, the Biden administration's proposals for global tax reform "would see many of the incentives underpinning profit-shifting to tax havens removed, and would see the very largest multinationals taxed not just on where subsidiary profits are booked, but where real economic value is derived."

"This would have a seismic impact on the likes of Amazon, Apple, Facebook, Googleand Microsoft (who have tax dodging hard-wired into their organizational structure), with billions of additional taxes paid across the world," Monaghan continued.

"We could be on the cusp of a once-in-a-generation moment," he added, "but world leaders at the forthcoming G7 and G20 world leader summits need to grasp the nettle, step upand engage with the agenda much more positively the benefit to public services across the world could be immense."

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Amazon, Facebook and other tech giants paid almost $100B less in taxes than they claimed: analysis - Salon

Amid a wave of M&A fever, will Amazons $8.45 billion takeover of MGM prompt its Silicon Valley rival Apple to refresh its shopping list to include a Hollywood studio?

The iPhone maker already has a giant footprint in entertainment through its services division which includes Apple TV+, Apple Music, the App Store, iCloud and more. Its revenue topped $16.9 billion in the first quarter, up from $13.3 billion in the year-ago period, and the tech giant boasts 660 million paid subscribers in total.

And CEO Tim Cook has described streamer Apple TV+s ambition as becoming one of the most desired platforms for storytellers, singling out comedy series Ted Lasso, drama The Morning Show and the miniseries Defending Jacob as its titles with significant buzz.

But the streamer is seen by some Wall Street analysts as lacking multiple, regular breakout hits, which has led some to argue for a studio acquisition. Morgan Stanley research released in April found only 8 percent of U.S. respondents said they use Apple TV+, a figure that lags far below Netflix (58 percent), Amazon Prime (45 percent) and Disney+ (31 percent).

Apple has made a major strategic mistake not buying a Hollywood studio while Amazon, Disney, Netflix and others run away with content, Wedbush analyst Dan Ives says. Content is king, and Apple built a mansion with hardly any furniture in it. MGM was a no-brainer acquisition for Apple, and they missed a huge opportunity.

Hal Vogel, CEO of Vogel Capital Management, suggests that Cook is afraid of shareholder blowback if he goes Hollywood in a big way.

The likes of Apple, Alphabets Google and Facebook are often cited as cash-rich tech titans that could gobble up Hollywood studios without much financial trouble. But two of them also have signaled their lack of sustained interest in more traditional premium content production. Facebook and Googles YouTube already tried plotting bigger scripted content pushes, then scaled back their ambitions.

But AT&Ts $43 billion deal to merge WarnerMedia with Discovery and Amazons MGM buy underscores the intensifying streaming wars as a potential catalyst for the next wave of industry consolidation, with some of the big tech companies increasingly seen as potential acquirers, CFRA Research analyst Tuna Amobi says.

Apple could choose to ramp up its Hollywood division with a mega buy of a studio the size of, say, Lionsgate, which gets mentioned as a possible takeover target given its relative lack of scale Lionsgates market cap is $3.8 billion, while Apples is $2.1 trillion as well as its 17,000-title library and film and TV franchises like Hunger Games, Twilight and its Starz drama Power.

Apple and Amazon are unique among tech giants, insofar as they each have streaming services, so there are synergies in owning content libraries, notes Wedbush analyst Michael Pachter. Or it could follow Netflixs lead and look to snap up smaller Hollywood shingles like Mark Millars comic book company Millarworld to bulk up its intellectual property ownership.

Amazons smart acquisition of MGM will spur studio M&A by its big tech streaming competitors [that] now face a crisis of content, says Peter Csathy, chairman of advisory firm CreaTV Media. Netflix is in search of franchises. Apple, too. Even Amazon may not be done yet for both offensive and defensive reasons.

This story appeared in the May 26 issue of The Hollywood Reporter magazine.Click here to subscribe.

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Will Apple Be the Next Tech Giant to Buy a Studio? - Hollywood Reporter

On May 26, 2021, WhatsApp filed a lawsuit in Delhi High Court against the Indian government seeking to block regulations coming into force on May 26 that would compel Facebooks messaging app to break privacy protections.

The Indian government has argued that any operations being run in India are subject to the law of the land and has built the main argument on the following lines:

Indias new Intermediary Guidelines and Digital Media Ethics Code designates significant social media intermediaries as standing to lose protection from lawsuits and criminal prosecution if they fail to adhere to the code.

Big social media firms will appoint Indian citizens to key compliance roles, remove content within 36 hours of a legal order and set up a mechanism to respond to complaints.

Social media platforms will have to make sure that it can trace back messages of any person who had first sent it, in case a court of any competent authority seeks such information.

Cases where the information can be sought include those dealing with safeguarding the safety and security of India, prevent and punish the offenses of rape and prevent the publication of sexually explicit material etc.

WhatsApp has already broken the privacy code by asking its customers to allow it to share their data with Facebook. As per established judicial dictum, no fundamental rights including the right to privacy is absolute and is subject to reasonable restrictions.

WhatsApp arguments are based on technical and moral questions, the main reasons are:

It will break the end-to-end encryption and compel WhatsApp to breach privacy protection. Requiring messaging apps to trace chats is the equivalent of asking WhatsApp to keep a fingerprint of every single message sent on WhatsApp.

The traceability cannot be on a case-to-case basis; in order to trace one message the company will have to trace every message and the rule raises the spectre of A mass surveillance mechanism of 400 million WhatsApp users in India.

The Modi regimes effort to control the media stems from many factors, it has suffered badly in the Covid crisis as common people were able to post digital content on social media, which exposed the inefficiency and mismanagement of the government. New Delhi has pressed tech companies to remove what it has described as misinformation on the COVID-19 pandemic ravaging India.

A recent Bloombergs article suggests that India may end up somewhere between an authoritarian style firewall and a Western model of free internet. New Delhi will be able to ensure that digital platforms are popular but docile, amplifying the governments messages without questioning propaganda or exposing state hypocrisy.

While tech giants like Facebook and Google may boast of their love for freedom of expression, the Indian government has already forced them to appoint grievance officers. Facebook has fallen in line; Twitter Inc has asked for a three-month extension.

Bloomberg feels that in the name of a responsible internet and protecting citizens from data imperialists, several Indian business tycoons will be eager to abet the government in soft censorship. The Ambanies and Adanies may be the ultimate beneficiaries of these rules.

Pakistan has a few lessons to learn from India; the Indian state is not bothered about half a billion subscribers and the loss of revenue due to the annoyance of tech companies. The Indian law of the land takes precedence over everything, and when it comes to National Security and preventing chaos, India will put its foot down.

Adeela Naureen and Umar Waqar

The authors are freelance journalists. They can be reached at adeelanaure-en@gmail.com.

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India versus tech giants - The Nation

Peter Thiel, co-founder and chairman of Palantir Technologies Inc., pauses during a news conference in Tokyo, Japan, on Monday, Nov. 18, 2019.

Kiyoshi Ota | Bloomberg | Getty Images

LONDON A campaign is being launched to try to stop U.S. tech giant Palantir from working with the U.K.'s National Health Service.

The "No Palantir in Our NHS" campaign launched at an event on Thursday comes after Palantir partnered with the NHS on a Covid-19 "Data Store." The project was designed to help the government and health service use data to monitor the spread of the virus.

Foxglove, which describes itself as a tech-justice nonprofit, is leading the campaign, while over 50 other organizations working on civil liberties, anti-racism, migrant justice and public health have also backed it.

"We got dozens of organizations to realize and agree that this company has no place in the NHS in the long term," Cori Crider, the lawyer who co-founded Foxglove, told CNBC on Wednesday.

Palantir, which has been criticized by privacy campaigners and human rights groups on multiple occasions, declined to comment when contacted by CNBC. A spokesperson for the NHS did not respond.

Founded in 2003 by tech entrepreneurs including billionaire Peter Thiel a Facebook board member who reportedly donated $1.25 million to Donald Trump's presidential campaign Palantir sells software that's designed to help public and private organizations analyze huge quantities of data and pull out meaningful patterns and connections.

Since its inception, the $45 billion publicly listed company has supported spy agencies, border forces and militaries, with the finer details of contracts often kept a closely guarded secret. It has also been expanding into health.

In April 2018, Bloomberg published an article headlined: "Palantir Knows Everything About You."

Named after the fictional "seeing stones" in "Lord of the Rings," Palantir has been linked to everything from efforts to track down undocumented immigrants in the United States to the development of unmanned drones for bombings and intelligence.

"Their background has generally been in contracts where people are harmed, not healed," Crider said.

Clive Lewis, a Labour Party member of Parliament and one of the campaign's backers, accused Palantir of having an "appalling track record."

"It's built its business supporting drone and missile strikes, immigration raids and arrests, not the delivery and care of medicine," Lewis told CNBC. "It's got a questionable agenda, and I think that will have a negative impact on patient trust, particularly among minoritized communities who may feel a threat from big government."

Palantir which has been trying to grow its European business in recent years has a significant presence in London's Soho neighborhood, with hundreds of employees across multiple offices in the area.

The Covid-19 Data Store project, which involves Palantir's Foundry data management platform, began in March 2020 alongside other tech giants as the government tried to slow the spread of the virus across the U.K. It was sold as a short-term effort to predict how best to deploy resources to deal with the pandemic.

The contract was quietly extended in December, when the NHS and Palantir signed a 23 million ($34 million) two-year deal that allows the company to continue its work until December 2022.

The NHS was sued by political website openDemocracy in February over the contract extension. "December's new, two-year contract reaches far beyond Covid: to Brexit, general business planning and much more," the group said.

The NHS contract allows Palantir to help manage the data lake, which contains everybody's health data for pandemic purposes.

"The reality is, sad to say, all this whiz-bang data integration didn't stop the United Kingdom having one of the worst death tolls in the Western world," said Crider. "This kind of techno solutionism is not necessarily the best way of making an NHS sustainable for the long haul."

Patient data is "pseudonymized" before it is processed by Palantir's software as part of an effort to protect patient privacy. The data management technique involves switching the original data set, with an alias or pseudonym. However, it is a reversible process that allows for re-identification if necessary, and some have questioned whether it's enough. Palantir may argue that it isn't interested in the patient data itself and that it only provides the platform that allows the NHS to analyze the data.

While Palantir is processing the patient data, the NHS remains the data owner, limiting what Palantir can do with it.

There have been some signs that government appetite for limitless spend on security has started to wane, and Palantir may have lost a couple of deals as a result, Crider said, pointing to a report in The Guardian that highlights some of the difficulties the EU's law agency had with Palantir's software.

Crider believes the firm has been trying to find new sources of government contracts beyond security as a result. "They hit on a new possibility, which was health data," she said.

The company was reportedly lobbying officials from the U.K. Department of Trade as well as health executives back in 2019. But it struggled to secure any contracts.

When the pandemic hit, however, the laws changed so that data sharing was done in a mandatory way, and for the first time in U.K. history everyone's data was pooled into a huge lake. Procurement rules were also reportedly changed. "Palantir pounced and they managed to get in," Crider said, adding that there was no bid or competitive tender.

Palantir's interest in health was highlighted again on Thursday when the Financial Times reported that the company has taken a strategic stake in British health firm Babylon as part of a $4.2 billion blank-check deal to take the start-up public in the U.S.

Babylon CEO Ali Parsa told the newspaper that "nobody" has brought some of the tech that Palantir owns "into the realm of biology and health care." Parsa, whose app offers a variety of health services to 24 million patients, added: "Their knowledge of health care can overhaul what we could do [together]. We wanted to take ... the day-to-day biometrics of the human body and be able to construct a more preemptive image by building a digital twin of each of us."

A boy runs past a mural supporting the NHS, by artist Rachel List, on the gates of the Hope & Anchor pub in Pontefract, Yorkshire, as the UK continues in lockdown to help curb the spread of the coronavirus.

Danny Lawson | Getty Images

Crider believes the U.K. is at an inflexion point when it comes to health data.

From July 1, the NHS is planning to pool the full medical histories of 55 million patients in England into a single database that will be available to academic and third parties for research and planning. Patients have until June 23 to opt out. Campaigners said Friday the "data grab" violates patient trust, and they're threatening to take legal action.

"The British public need to realize that we are now coming into a period where the future of the NHS health data, and the health data settlement of this country, is now kind of up for grabs and up for debate," Crider said. "Companies have seen it for a while. Palantir don't want to monetize the data they want to monetize the infrastructure, but there are other companies who absolutely do want to monetize access to the data."

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Palantir-NHS: Campaign launched to get Peter Thiel's firm out of NHS - CNBC

U.S. President Joe Biden speaks during a news conference with Virginia Governor Ralph Northam as they meet to discuss the state's progress against the coronavirus disease (COVID-19) pandemic at Sportrock Climbing Centers in Alexandria, Virginia, May 28, 2021.

Evelyn Hockstein | Reuters

LONDON With G-7 finance ministers likely to back a U.S. proposal for a minimum corporate tax rate this weekend, analysts have highlighted how it could help form alliances on geopolitical issues in the years ahead.

Many European officials have for a long time called for joint approach to taxation, even in countries like Ireland where some major U.S. tech giants are headquartered. Essentially, the argument has been that in order to fix internal differences among the 27 EU nations, the best outcome would be to find a common method to tax on an international setting.

President Joe Biden has now given hope to such a policy, supporting a global minimum corporate tax rate of 15%. The question at this point is not so much whether there will be a deal in this regard, but when it will be confirmed. The rules are not only expected to have an impact on taxation, but also on other fronts, including on how the U.S. deals with China.

"Take any issue that is a problem from Washington's point of view when it comes to China: currency, intellectual property, the origins of the pandemic, behavior in the South China Sea, Xinjiang. ... All of these are important to various degrees to Washington. And they're important to the Europeans, too," Jeremy Ghez, affiliate professor at H.E.C. Business School in Paris, told CNBC on Thursday.

"Where Biden and [former President Donald] Trump may differ is on the issue of alliances. Trump felt [the Europeans] were of little help and that Europe was as bad as China when it came to trade. Biden believes that with a broad coalition, you may be able to push China down a more constructive path. International pressure, that is pressure not coming from Washington only, could prove useful on any of these topics," Ghez said.

In the latest escalation toward China, Biden has signed an executive order that bans American entities from investing in 59 Chinese firms allegedly tied to the military.

Speaking to CNBC on Friday, the EU's commissioner for economic affairs, Paolo Gentiloni, said relations with China "will be a very important issue" when the heads of state of the G-7 gather next week.

"We have to cooperate in some sectors, especially on climate change and climate transition, but at the same time we have to have a strong global agreement among us to ensure (a) level playing field on [the] economy, which is not at all granted from China and to face the challenge of the relation with China in the future," he said, adding that the G-7 "will work together to find the right balance."

The EU's relationship with China has been bumpy in recent months. Ties between the EU and China had ended 2020 on a high note, with the signing of an investment deal that would make it easier for European firms to invest and work in China where they face competition from state-funded firms.

However, the ratification of this deal has been put on hold by Europe after a diplomatic row with Beijing in March. At the time, the EU decided to impose sanctions against China for its treatment of the ethnic minority Uyghurs and Beijing retaliated by announcing counter-sanctions against members of the European Parliament.

The largely Muslim Uyghurs, who live mostly in China's west, have been identified by the United Nations,United States,United Kingdomand others as a repressed group. China's foreign ministry in Marchcharacterized such claims as "malicious lies"designed to "smear China" and "frustrate China's development."

Leslie Vinjamuri, director of the U.S. and Americas Programme at Chatham House, told CNBC earlier this week that the pause on the ratification was a "game changer" as it "allows for a bigger cooperation" between the EU and the U.S.

Discussions about China are likely to continue between U.S. and EU officials after next week's G-7 leaders meeting, when Biden flies to Brussels for an EU-U.S. summit on June 15.

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Biden's G-7 tax offer will win crucial political points in Europe with tougher battles ahead - CNBC

This week, King county, Washington, became the first county in the US to ban its sheriffs office and other agencies from using facial recognition technology in nearly all circumstances.

The new measure flies in the face of Washington states lenient facial recognition law, which was authored by a Microsoft employee and passed last year, and brings a challenge on an emerging set of technologies to greater Seattle, the home of both Microsoft and Amazon, two tech giants that sell facial recognition software.

The situation in Washington state reflects a broader national debate. Law enforcement is increasingly reliant on facial recognition, which can help identify suspects. Earlier this year, it was used by the FBI to identify insurgents at the US Capitol on Jan. 6. But as its use spreads, theres a growing backlash from critics, who see the practice as an invasion of privacy, an expansion of police power, and biased against people of color.

In the absence of any federal privacy regulation, some states and localities are taking action on the matter. King county joins more than a dozen cities, including San Francisco and Boston, and the state of Vermont, which have already banned police and other agencies from using facial recognition. Experts expect more to join the list.

The King county law, which only applies to countywide agencies, prohibits the government from acquiring facial recognition technology or using that kind of biometric data. The county police can still participate in the nationwide program that locates missing children, which relies on facial recognition.

King county was not currently using any facial recognition technology and both Amazon and Microsoft halted sales of their tech to police departments last summer following the police killing of George Floyd and nationwide protests over the mistreatment of Black Americans at the hands of law enforcement.

IBM and others have stopped selling facial recognition technology to law enforcement agencies as well, but others carry on. Earlier this year, BuzzFeed News found that more than 7,000 people from nearly 2,000 government agencies used or tested facial recognition software from Clearview AI.

Washington states nascent law allows facial recognition technology as long as its AI systems are subject to meaningful human review, a provision widely criticized by civil liberties advocates.

It is an industry-backed bill that purports to put safeguards around the use of facial recognition technology, but actually legitimizes the infrastructural expansion of facial recognition technology that is sold by tech companies, Jennifer Lee, the technology and liberty project manager at the Washington ACLU, said in an interview.

Facial recognition is likely more widespread than you expect in the US. According to Georgetown Law Schools Center on Privacy & Technology, as of 2016, about half of all American adults had their photo included in a criminal facial recognition database.

While facial recognition technology has been used to capture criminals like the Capital Gazette newspaper mass shooter, it also carries the risk of overreach and false positives. There have been numerous reports of false identification of criminals based on the technology in recent years in which Black people were wrongly arrested.

The Electronic Frontier Foundation, a leading digital rights group, says it supports the complete abolition of government surveillance via facial recognition. Adam Schwartz, a senior staff attorney at the foundation, said its use is discriminatory, an Orwellian invasion of privacy, and deters people from participating in public protests.

There are some surveillance technologies that we think that broad requirements and transparency about how its being used might be enough, but face surveillance is so dangerous that governments should not be using it at all, Schwartz told Quartz.

Daniel Castro, who directs the Information Technology and Innovation Foundations (ITIF) Center for Data Innovation, said the King county law is premised on faulty information about how biased these systems are. Castro said the evidence is incontrovertible that the best-performing systems have no racial bias.

A 2019 study from the National Institute of Standards and Technology (NIST), a government agency, found significant differences among various algorithms tested. NIST concluded that US-developed algorithms had high rates of false positives for Asians, African Americans, and Native Americans.

But Castro asserts that theres a stark difference between the best and worst-performing algorithms, and said the King county ban makes it harder for local government to use everyday technology to keep its citizens and workers safe.

Pressure is mounting to rein in the worst aspects of government use of facial recognition or ban it entirely.

On Thursday, a coalition of civil liberties groups including the ACLU and EFF put out a joint statement saying that even with improvements in facial recognition technology, its still fundamentally flawed. The group, which also includes the NAACP and the Innocence Project, is calling for a ban or moratorium on law enforcement use of the tech. The letter also urged lawmakers not to preempt state and local bans through any federal legislation.

A series of bills were introduced last Congress, including the George Floyd Justice In Policing Act and Advancing Facial Recognition Act, that would have clamped down on facial recognition, but none were adopted.

Brian Hengesbaugh, who chairs the Global Data Privacy and Security Business Unit at the law firm Baker McKenzie, expects a wildfire of activity in privacy regulations in the coming years. And any future federal and state privacy laws would likely include requirements for public and private entities capturing biometric data, he said. In many of the US jurisdictions that regulate biometric data collection, and under the EUs GDPR regulations, private companies have to obtain express consent from individuals they track or else they could face legal action. Thats not really feasible in a law enforcement context.

For local jurisdictions considering what to do about facial recognition, the question is broader: Does this technology have any place in law enforcement, or should we head it off before it goes too far?

Read more:

Should the police have facial recognition tech? - Quartz

In its latest ambitious digital policy announcement, the European Union has proposed creating a framework for a trusted and secure European e-ID (aka digital identity) which it said today it wants to be available to all citizens, residents and businesses to make it easer to use a national digital identity to prove who they are in order to access public sector or commercial services regardless of where they are in the bloc.

The EU does already have a regulation on electronic authentication systems (eIDAS), which entered into force in 2014, but the commissions intention with the e-ID proposal is to expand on that by addressing some of its limitations and inadequacies (such as poor uptake and a lack of mobile support).

It also wants the e-ID framework to incorporate digital wallets meaning the user will be able to choose to download a wallet app to a mobile device where they can store and selectively share electronic documents that might be needed for a specific identity verification transaction, such as when opening a bank account or applying for a loan. Other functions (like e-signing) are also envisaged being supported by these e-ID digital wallets.

Other examples the commission gives where it sees a harmonized e-ID coming in handy include renting a car or checking into a hotel. EU lawmakers also suggest full interoperability for authentication of national digital IDs could be helpful for citizens needing to submit a local tax declaration or enrolling in a regional university.

Some member states do already offer national electronic IDs but theres a problem with interoperability across borders, per the commission, which noted today that just 14% of key public service providers across all member states allow cross-border authentication with an e-Identity system, though it also said cross-border authentications are rising.

A universally accepted e-ID could in theory help grease digital activity throughout the EUs single market by making it easier for Europeans to verify their identity and access commercial or publicly provided services when travelling or living outside their home market.

EU lawmakers also seem to believe theres an opportunity to own a strategic piece of the digital puzzle here, if they can create a unifying framework for all European national digital IDs offering consumers not just a more convenient alternative to carrying around a physical version of their national ID (at least in some situations), and/or other documents they might need to show when applying to access specific services, but what commissioners billed today as a European choice i.e., versus commercial digital ID systems that may not offer the same high-level pledge of a trusted and secure ID system that lets the user entirely control who gets to sees which bits of their data.

A number of tech giants do of course already offer users the ability to sign in to third-party digital services using the same credentials to access their own service. But in most cases doing so means the user is opening a fresh conduit for their personal data to flow back to the data-mining platform giant that controls the credential, letting Facebook (etc.) further flesh out what it knows about that users internet activity.

The new European Digital Identity Wallets will enable all Europeans to access services online without having to use private identification methods or unnecessarily sharing personal data. With this solution they will have full control of the data they share, is the commission alternative vision for the proposed e-ID framework.

It also suggests the system could create substantial upside for European businesses by supporting them in offering a wide range of new services atop the associated pledge of a secure and trusted identification service. And driving public trust in digital services is a key plank of how the commission approaches digital policymaking arguing that its a essential lever to grow uptake of online services.

However to say this e-ID scheme is ambitious is a polite word for how viable it looks.

Aside from the tricky issue of adoption (i.e., actually getting Europeans to (A) know about e-ID, and (B) actually use it, by also (C) getting enough platforms to support it, as well as (D) getting providers on board to create the necessary wallets for envisaged functionality to pan out and be as robustly secure as promised), theyll also presumably need to (E) convince and/or compel web browsers to integrate e-ID so it can be accessed in a streamlined way).

The alternative (not being baked into browsers UIs) would surely make the other adoption steps trickier.

The commissions press release is fairly thin on such detail, though saying only that: Very large platforms will be required to accept the use of European Digital Identity wallets upon request of the user.

Nonetheless, a whole chunk of the proposal is given over to discussion of Qualified certificates for website authentication a trusted services provision, also expanding on the approach taken in eIDAS, which the commission is keen for e-ID to incorporate in order to further boost user trust by offering a certified guarantee of whos behind a website (although the proposal says it will be voluntary for websites to get certified).

The upshot of this component of the proposal is that web browsers would need to support and display these certificates, in order for the envisaged trust to flow which sums to a whole lot of highly nuanced web infrastructure work needed to be done by third parties to interoperate with this EU requirement. (Work that browser makers already seem to have expressed serious misgivings about.)

This regulation may force web browsers to accept additional types of trust certificates,' said security and privacy researcher, Dr. Lukasz Olejnik, discussing the commissions proposal with TechCrunch.

This comes with a requirement for web browsers to honor such certificates and change the web browser user interfaces to display this in some way. It is doubtful that such a thing actually improves trust. If this was a mechanism to fight fake news it would be a cumbersome one. On the other hand we have an additional precedent here when web browser vendors are required to amend their security and privacy models.

Another big question mark thrown up by the commissions e-ID plan is how exactly the envisaged certified digital identity wallets would store and most importantly safeguard user data. That very much remains to be determined, at this nascent stage.

Theres discussion in the regulations recitals, for example, of member states being encouraged to set up jointly sandboxes to test innovative solutions in a controlled and secure environment in particular to improve the functionality, protection of personal data, security and interoperability of the solutions and to inform future updates of technical references and legal requirements.

And it seems that a range of approaches are being entertained, with recital 11 discussing using biometric authentication for accessing digital wallets (while also noting potential rights risks as well as the need to ensure adequate security):

European Digital Identity Wallets should ensure the highest level of security for the personal data used for authentication irrespective of whether such data is stored locally or on cloud-based solutions, taking into account the different levels of risk. Using biometrics to authenticate is one of the identifications methods providing a high level of confidence, in particular when used in combination with other elements of authentication. Since biometrics represents a unique characteristic of a person, the use of biometrics requires organisational and security measures, commensurate to the risk that such processing may entail to the rights and freedoms of natural persons and in accordance with Regulation 2016/679.

In short, its clear that underlying the commissions big, huge idea of a unified (and unifying) European e-ID is a complex mass of requirements needed to deliver on the vision of a secure and trusted European digital ID that doesnt just languish ignored and unused by most web users some highly technical requirements, others (such as achieving the sought for widespread adoption) no less challenging.

The impediments to success here certainly look daunting.

Nonetheless, lawmakers are ploughing ahead, arguing that the pandemics acceleration of digital service adoption has shown the pressing need to address eIDAS shortcomings and deliver on the goal of effective and user-friendly digital services across the EU.

Alongside todays regulatory proposal theyve put out a recommendation, inviting member states to establish a common toolbox by September 2022 and to start the necessary preparatory work immediately with a goal of publishing the agreed toolbox in October 2022 and starting pilot projects (based on the agreed technical framework) sometime thereafter.

This toolbox should include the technical architecture, standards and guidelines for best practices, the commission adds, eliding the large cans of worms being firmly cracked open.

Still, its penciled-in timeframe for mass adoption of around a decade does a better job of illustrating the scale of the challenge, with the commission writing that it wants 80% of citizens to be using an e-ID solution by 2030.

The even longer game the bloc is playing is to try to achieve digital sovereignty so its not beholden to foreign-owned tech giants. And an own brand, autonomously operated European digital identity does certainly align with that strategic goal.

This report was updated with additional comment.

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Europe wants to go its own way on digital identity - TechCrunch

A deal on taxing tech giants at this weeks G7 finance meeting would only be the start of a lengthy process, an expert has said.

The US is pushing for a global minimum tax rate which would stop companies from gaming the system and boost government revenues after the pandemic.

G7 finance ministers are expected to discuss the proposal in talks on Friday and Saturday in the run-up to next weeks leaders summit in Britain.

Patrick Holden, an expert in international political economy at the University of Plymouth, said a deal would be the first major piece of tax co-operation in the modern era.

But Dr Holden told The National there would still be significant hurdles between a G7 deal and implementing the proposal.

I think theyll come up with some minimum agreement and then theyll have to get the countries at the G20 which is happening later this summer in Italy to agree, and that includes China, Russia and Brazil and lots of other big countries like that, he said.

An entity like the G7, its like a club, its not like the EU or even the United Nations or the World Trade Organisation where they make laws.

They would all have to put it into legislation in Japan and Canada and the US and UK and so on, so thats going to be a long process with lots of nuances involved.

He said: It will be an important agreement, and it will send a signal in various senses, but therell be a lot for lawyers and accountants to work out.

Germany and the US, which back the minimum tax proposal, both voiced optimism over the prospects for a G7 agreement.

German Finance Minister Olaf Scholz said G7 nations were very close to concluding an international agreement.

Washington wants a minimum of at least 15 per cent, but there are calls for a higher floor, such as 21 or 25 per cent.

Research unveiled by the European Tax Observatory found that the revenues of EU countries could rise by more than $200 billion a year at the higher rate.

In this scenario, EU countries would force companies to make up the difference at home if they pay a lower rate in overseas tax havens.

This would make it impossible for companies to lower their bills by setting up shop in low-tax countries such as Ireland.

Irelands corporate tax rate of 12.5 per cent is one of the lowest in the world, attracting a clutch of tech companies, such as Google and Facebook.

Ireland, which is not in the G7, said it had significant reservations about the US tax proposal.

French European affairs minister Clement Beaune said Ireland was the EU member most hostile to the idea, with Cyprus and Malta also sceptical.

Alex Cobham, the chief executive of the Tax Justice Network, said at a World Economic Forum event that the extra revenues from a minimum tax could help recovery from the pandemic.

Fifteen per cent would be a step forward, it would still bring in more than $250 billion of new revenues and that would make it the biggest change in 100 years in international tax rules, he said.

The pandemic has been the point of the spear

Patrick Holden

If they go to 21 per cent, or even better to 25 per cent, we're talking $500bn, $600bn or $700bn, that sort of money.

When you're thinking about perhaps $50 billion needed for Covax or the amounts to invest in public health systems in lower income countries, suddenly, this is really game changing.

Dr Holden said the pandemic had given a burst of momentum to the idea.

The pandemic has done a lot of damage to the finances of countries including major countries like the G7 ones, he said.

Theres been a series of crises, but obviously the pandemic has been the point of the spear.

See more here:

Long road to making tech giants pay: Expert says G7 tax deal would only be the start - The National