By Agence France-Presse | Updated: 11 July 2020
The United States on Friday unveiled heavy import duties on France in retaliation for the country’s tax on American tech giants, but will hold off on collecting the fees to allow time for the dispute to be resolved.
The office of US Trade Representative Robert Lighthizer found France’s digital services tax was discriminatory and “unfairly targets US digital technology companies,” and will impose 25 percent punitive duties on $1.3 billion (roughly Rs. 9,770 crores) in French products.
However, it will suspend the tariffs until January 6, 2021 while discussions continue over the disagreement.
France approved the tax last summer on tech firms like Facebook, Amazon, Apple, and Google, which were accused of moving their profits offshore to evade taxes.
But in January, Paris suspended collection of the tax through the end of the year.
French cosmetics and handbags will be subject to the US tariffs, but champagne, camembert and Roquefort were spared, according to the final product list after USTR collected thousands of public comments on the retaliation plans.
The sides have been trying to a negotiate a deal through the Organisation for Economic Co-operation and Development that would address the policy dilemma of taxing profits earned in one country by a company based in another with a more favourable tax policy.
But the talks have not made much headway and were suspended due to the coronavirus pandemic. Meanwhile, more countries are considering following France’s example.
Lighthizer said Thursday that the US “won’t tolerate” unfair treatment, although he acknowledged that there is a problem with multinational corporations offshoring profits to avoid paying taxes.
But he said the French tax “didn’t even do a clever job of veiling the fact that they were just trying to get into the pocket of US companies.”
A USTR investigation in January ruled the tax was “unreasonable” and threatened 100 percent duties on a potential list of $2.4 billion in French goods.
Vitor Gaspar, head of the IMF’s fiscal affairs department, told AFP on Friday that there is “a perception that firms that are extremely profitable, that act in the global sphere, are not paying their fair share of taxation,” and called for an international agreement.
“It’s very important to avoid trade wars, it’s very important to avoid tax wars,” Gaspar said in an interview.
A “cooperative approach is in the best interest of everybody,” he said, noting it would be “a signal of the capacity of the global community to work together if a deal on international corporate taxation would be struck.”
Matt Schruers, the president of the Computer and Communications Industry Association, welcomed the US move.
“Today’s action sends a strong message that discriminatory taxes aimed at US companies are not a path to modernising the global tax system,” Schruers said in a statement.
“Changes to international tax rules must be negotiated in good faith through a consensus-based approach at the OECD that addresses the changes of the digitalised global economy.”
Amazon India to Launch Online Drug Store, Starting With Bengaluru
By Reuters | Updated: 14 August 2020
Amazon said on Friday it will launch an online pharmacy in India that will serve the city of Bengaluru, the latest move by the e-commerce giant to widen its reach in a key growth market.
The service, “Amazon Pharmacy”, will offer both over-the-counter and prescription-based drugs, basic health devices and traditional Indian herbal medicines, the company said in a statement, without giving a timeline for the launch.
The move comes amid increasing competition in India with rivals Walmart-owned Flipkart, billionaire Mukesh Ambani’s upstart online grocery service JioMart and a range of other smaller players.
Last month, the company decided to open 10 new warehouses in India and start offering auto insurance. Amazon had also secured clearance for alcohol delivery in one Indian state, Reuters reported in June.
India is yet to finalise regulations for online drug sales, or e-pharmacies, but the growth of several online sellers such as Medlife, Netmeds, Temasek-backed PharmEasy, and Sequoia Capital-backed 1mg has threatened traditional drug stores.
The companies have said they comply with all Indian laws even as many trader groups continue to protest against e-pharmacies, saying that would lead to sale of medicines without proper verification.
“Amazon’s customer base is very high, so we are bound to lose business. There are 5 million families dependent on this (offline) trade,” Yash Aggarwal, legal head of South Chemists and Distributors Association in New Delhi, said on Friday.
The group will raise objections against Amazon’s move with the government, he said.
© Thomson Reuters 2020
Government’s Plan to Regulate ‘Non-Personal’ Data Faces Pushback From US Tech Giants
By Reuters | Updated: 10 August 2020
Government’s plan to regulate “non-personal” data has jolted US tech giants Amazon, Facebook, and Google, and a group representing them is preparing to push back against the proposals, according to sources and a letter seen by Reuters. A government-appointed panel in July recommended setting up a regulator for information that is anonymised or devoid of personal details but critical for companies to build their businesses.
The panel proposed a mechanism for firms to share data with other entities – even competitors – saying this would spur the digital ecosystem. The report, if adopted by the government, will form the basis of a new law to regulate such data.
But the US-India Business Council (USIBC), part of the US Chamber of Commerce, calls imposed data sharing “anathema” to promoting competition and says this undermines investments made by companies to process and collect such information, according to a draft letter for the government.
“USIBC and the US Chamber of Commerce are categorically opposed to mandates that require the sharing of proprietary data,” says the USIBC’s previously unreported letter, which is likely to be completed and submitted in coming weeks to India’s information-technology ministry.
“It will also be tantamount to confiscation of investors’ assets and undermine intellectual property protections.”
A USIBC spokeswoman had no comment on the draft letter. The US Chamber of Commerce didn’t respond to Reuters queries.
The head of the panel, Kris Gopalakrishnan, a founder of technology giant Infosys, said the group will work with the government to review input from the industry.
Ministry of Electronics and Information Technology, Amazon, Facebook, and Alphabet’s Google did not respond to requests for comment. The report is open for public comments until September 13.
“Forced data sharing”
Government’s plan to regulate non-personal data is the latest irritant for US tech companies that have been battling tighter e-commerce rules and data storage norms that several countries are also developing.
New Delhi and Washington are already at odds on such issues, as well as over digital taxes and tariffs.
The USIBC draft letter says “forced data sharing” will limit foreign trade and investment in developing countries, and the panel’s proposals run against Prime Minister Narendra Modi’s calls for US companies to invest in the country.
The lobby group expresses concern about the panel’s recommendation to mandate local storage for non-personal data, describing this as a “dramatic tightening” of India’s international data transfer regime.
“These are far-reaching concepts that would have a significant impact on the ability of both Indian and multinational firms to do business in India,” Washington-headquartered law firm Covington & Burling said in a note prepared for the USIBC, which was also seen by Reuters.
The law firm did not respond to a request for comment.
The government panel has listed research, national security and policymaking among purposes for which such data should be shared. Three sources said tech executives participated in several meetings in recent weeks to discuss concerns over the report.
© Thomson Reuters 2020
UN Reports Sharp Increase in Cybercrime During Pandemic
By Associated Press | Updated: 7 August 2020
A 350 percent increase in phishing websites was reported in the first quarter of the year, many targeting hospitals and health care systems and hindering their work responding to the COVID-19 pandemic, the UN counterterrorism chief said Thursday.
Vladimir Voronkov told the UN Security Council that the upsurge in phishing sites was part of “a significant rise in cybercrime in recent months” reported by speakers at last month’s first Virtual Counterterrorism Week at the United Nations.
He said the UN and global experts don’t yet fully understand “the impact and consequences of the pandemic on global peace and security, and more specifically on organised crime and terrorism.”
“We know that terrorists are exploiting the significant disruption and economic hardships caused by COVID-19 to spread fear, hate, and division and radicalise and recruit new followers,” Voronkov said. “The increase in Internet usage and cyber-crime during the pandemic further compounds the problem.”
The weeklong meeting was attended by representatives from 134 countries, 88 civil society and private sector organisations, 47 international and regional organisations and 40 United Nations bodies, he said.
Undersecretary-General Voronkov said the discussions showed a shared understanding and concern that “terrorists are generating funds from illicit trafficking in drugs, goods, natural resources, and antiquities, as well as kidnapping for ransom, extorting and committing other heinous crimes.”
He said UN member nations “are rightly focused on tackling the health emergency and human crisis caused by COVID-19,” but he urged them not to forget the threat of terrorism.
In many parts of the world, Voronkov said, “terrorists are exploiting local grievances and poor governance to regroup and assert their control.”
“The pandemic has the potential to act as a catalyst in the spread of terrorism and violent extremism by exacerbating inequalities, undermining social cohesion and fueling local conflicts,” Voronkov said. “We must continue our fight against terrorist groups and criminal networks to deny them the opportunity to exploit the COVID-19 crisis.”
Ghada Waly, executive director of the Vienna-based UN Office on Drugs and Crime, told the council meeting on the linkage between counterterrorism and transnational organised crime that the links are “complex and multifaceted,” and “the COVID-19 crisis poses a host of new challenges to national authorities.”
“Organised criminal groups and terrorists may seek to capitalise on and exploit new vulnerabilities,” she said, “and transit patterns are shifting in view of travel restrictions and lockdown measures, adding further challenges for border security.”
Waly said: “Comprehensive and cooperative responses are needed more than ever.”
Amazon Starts Preparations to Launch in Sweden
By Reuters | Updated: 5 August 2020
Amazon has started preparations to launch in Sweden, marking its first step to establish a local presence in a Nordic country.
Swedish customers can already shop on Amazon through its websites in other European countries such as Germany, and get their purchases shipped to the country, but this often meant paying high delivery charges.
“We are optimistic that, by focusing on the things we believe customers will place the greatest emphasis on – low prices, a wide range and fast deliveries – we will eventually be able to win the trust of Swedish customers,” Alex Ootes, vice president for EU Expansion at Amazon, said on Tuesday,
The Swedish website amazon.se was still directing customers to amazon.de with an option to deliver to Sweden. Amazon has not released a date for the launch of the website, a spokesman said.
Amazon did not say if it would create a warehouse or distribution hub in Sweden but Ootes said: “The next step is to introduce a complete retail offering in Sweden and that is what we plan to do now”.
Logistics group Kuehne and Nagel told Reuters it was building a contract logistics facility in Eskilstuna, about 100 km west of Sweden’s capital Stockholm.
The probable entry of Amazon into Sweden has been talked about for years and could represent a challenge to local players.
Daniel Ovin, senior analyst at Nordea, said that based on a report written in October autoparts, sporting goods and general merchandise would be the most exposed sectors after an Amazon entry in the Nordics.
Ovin added that retailers in United States, Britain, Germany, and France that have adopted successful strategies to meet the challenge from Amazon have turned to premium products, sharpened their delivery mechanisms, increased private labels or added brands that were not sold on Amazon.
Shares of budget DIY and homewares retailer Clas Ohlson, fashion specialist Boozt AB, and e-books seller Storytel edged lower.
© Thomson Reuters 2020
Google Cloud Prepares for Black Friday ‘Peak on Top of Peak’
By Reuters | Updated: 4 August 2020
Alphabet’s Google Cloud unit is poised for a surge in fourth-quarter sales from US retailers, as they brace for record online shopping during the holidays because of COVID-19 lockdowns.
Cloud technology, used to host websites and store data, is a key part of many retailers’ e-commerce operations. As fees are often pegged to site traffic, a jump in activity will drive up revenue for the unit.
Carrie Tharp, vice president of retail and consumer at Google Cloud, told Reuters that her team had this year tossed out its linear growth model to predict how many servers it will need to process web orders for retailers around Black Friday.
“We’re planning for peak on top of peak,” she said on Monday. That could be a boon for Google Cloud, which has generated about 30 percent of its revenue during the fourth quarter the last two years.
Stores such as Kohls and Wayfair lean on Google months in advance to ensure it has enough servers to withstand increased shopping during holiday discount days such as Black Friday and Cyber Monday in November and December.
This year, Black Friday-style demand has flooded shops since March, when the United States began lockdowns, Tharp said.
Holiday shopping is expected to boost demand further, as retailers including Target and Walmart have said they will reduce in-store hours because of coronavirus concerns.
Tharp said the pandemic has already benefitted Google Cloud, with some retailers adopting its predictive algorithms years ahead of plan to help them work out the most efficient way of fulfilling orders.
Electronics retailer Best Buy, for instance, announced on Tuesday a multi-year deal to centralize customer and product data with Google Cloud to improve its loyalty program and online ad campaigns.
The companies declined to elaborate on the deal, but Tharp said she hopes it leads to Google eventually powering Best Buy’s web ordering system.
© Thomson Reuters 2020
Australia to Make Facebook, Google Pay for News in Landmark Move
By Reuters | Updated: 31 July 2020
Australia will force US tech giants Facebook and Alphabet’s Google to pay Australian media outlets for news content in a landmark move to protect independent journalism that will be watched around the world.
Australia will become the first country to require Facebook and Google to pay for news content provided by media companies under a royalty-style system that will become law this year, Treasurer Josh Frydenberg said.
“It’s about a fair go for Australian news media businesses. It’s about ensuring that we have increased competition, increased consumer protection, and a sustainable media landscape,” Frydenberg told reporters in Melbourne.
“Nothing less than the future of the Australian media landscape is at stake.”
The move comes as the tech giants fend off calls around the world for greater regulation, and a day after Google and Facebook took a battering for alleged abuse of market power from US lawmakers in a congressional hearing.
Following an inquiry into the state of the media market and the power of the US platforms, the Australian government late last year told Facebook and Google to negotiate a voluntary deal with media companies to use their content.
Those talks went nowhere and Canberra now says if an agreement cannot reached through arbitration within 45 days the Australian Communications and Media Authority would set legally binding terms on behalf of the government.
Google said the regulation ignores “billions of clicks” that it sends to Australian news publishers each year.
“It sends a concerning message to businesses and investors that the Australian government will intervene instead of letting the market work,” Mel Silva, managing director of Google Australia and New Zealand, said in a statement.
“It does nothing to solve the fundamental challenges of creating a business model fit for the digital age.”
Facebook did not immediately respond to a request for comment.
“Unfair and damaging”
Media companies including News Corp Australia, a unit of Rupert Murdoch’s News Corp, lobbied hard for the government to force the US companies to the negotiating table amid a long decline in advertising revenue.
“While other countries are talking about the tech giants’ unfair and damaging behaviour, the Australian government … (is) taking world-first action,” News Corp Australia Executive Chairman Michael Miller said in a statement.
A 2019 study estimated about 3,000 journalism jobs have been lost in Australia in the past 10 years, as traditional media companies bled advertising revenue to Google and Facebook which paid nothing for news content.
For every AUD 100 (roughly Rs. 5,380) spent on online advertising in Australia, excluding classifieds, nearly a third goes to Google and Facebook, according to Frydenberg.
Other countries have tried and failed to force the hands of the tech giants.
Publishers in Germany, France and Spain have pushed to pass national copyright laws that force Google pay licensing fees when it publishes snippets of their news articles.
In 2019, Google stopped showing news snippets from European publishers on search results for its French users, while Germany’s biggest news publisher, Axel Springer, allowed the search engine to run snippets of its articles after traffic to its sites to plunged.
© Thomson Reuters 2020
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