Why it’s tough to tame Google, Facebook, Amazon & Apple
Bloomberg|
Updated: Nov 30, 2017, 10.14 AM IST
By Peter Coy
NEW YORK: The tech fab four, Apple, Google, Amazon and Facebook, provide some of the world’s best-loved products and services. Investors love them, too. Yet the four, taken together, also stand widely accused of the sins associated with corporate bullies: crushing competition, avoiding taxes, undermining democracy and invading privacy. The result, so far, has been threats of new taxes and regulations. Are these companies our friends, enemies or frenemies?
Google: Breaking up is hard
When people worry that companies are too powerful, the first impulse is to break them into pieces. An alternative would be to split Google into, say, five smaller companies. Call them Google, Hoogle, Ioogle, Joogle and Koogle. However, one of the little five could soon come to dominate the others. If breaking up a tech giant is hard, another remedy would be to assert more control over it.
Amazon.com: The Gulliver Solution
The world has a love-hate relationship with Amazon. Consumers mainly love it, competitors hate it and the government is pulled in both directions. Amazon is a "cheetelephant," said one analyst: an elephant that runs as fast as a cheetah. It’s considerably faster than the regulators. A key problem is coming up with a standard for judging Amazon. Let’s say Amazon slashes prices. Is that a “predatory” move or just aggressive pricing? If the choice is to accept Amazon’s dominance, one solution would be to designate Amazon as a common carrier, which would let regulators control what Amazon charges vendors.
Facebook: Make it liable
Europeans have floated the idea of treating Facebook, Google and Twitter like news organisations, making them responsible for content. But that’s like holding the phone company responsible for things people say over the phone.
Facebook has started rooting out offensive material. But that’s creating a whole new set of problems, including a backlash from those who say Facebook is becoming an unofficial censor. Facebook is damned if it does censor and damned if it doesn’t.
Apple: Another bite for the taxman
Apple finished the past fiscal year with $216 billion in cash and marketable securities held by foreign subsidiaries. Right now Apple doesn’t have to pay US tax on profits earned abroad until it "repatriates" the money. But the Europeans are tightening the loopholes. Governments want money, and the tech giants have a lot of it. While trying to come up with a better tax system, some Europeans are discussing an idea of splitting a company’s worldwide tax liability among countries, according to how much revenue it derives in each country.
Assets or employment could also be yardsticks. But getting low-tax countries to go along would be tough, though. So something like the current tax system, albeit with fewer loopholes, is likely to persist for at least awhile.
As the tech giants grow and invade each other’s turf, it may turn out that the strongest force preventing them is the force of competition — each other.
NEW YORK: The tech fab four, Apple, Google, Amazon and Facebook, provide some of the world’s best-loved products and services. Investors love them, too. Yet the four, taken together, also stand widely accused of the sins associated with corporate bullies: crushing competition, avoiding taxes, undermining democracy and invading privacy. The result, so far, has been threats of new taxes and regulations. Are these companies our friends, enemies or frenemies?
Google: Breaking up is hard
When people worry that companies are too powerful, the first impulse is to break them into pieces. An alternative would be to split Google into, say, five smaller companies. Call them Google, Hoogle, Ioogle, Joogle and Koogle. However, one of the little five could soon come to dominate the others. If breaking up a tech giant is hard, another remedy would be to assert more control over it.
Amazon.com: The Gulliver Solution
The world has a love-hate relationship with Amazon. Consumers mainly love it, competitors hate it and the government is pulled in both directions. Amazon is a "cheetelephant," said one analyst: an elephant that runs as fast as a cheetah. It’s considerably faster than the regulators. A key problem is coming up with a standard for judging Amazon. Let’s say Amazon slashes prices. Is that a “predatory” move or just aggressive pricing? If the choice is to accept Amazon’s dominance, one solution would be to designate Amazon as a common carrier, which would let regulators control what Amazon charges vendors.
Facebook: Make it liable
Europeans have floated the idea of treating Facebook, Google and Twitter like news organisations, making them responsible for content. But that’s like holding the phone company responsible for things people say over the phone.
Facebook has started rooting out offensive material. But that’s creating a whole new set of problems, including a backlash from those who say Facebook is becoming an unofficial censor. Facebook is damned if it does censor and damned if it doesn’t.
Apple: Another bite for the taxman
Apple finished the past fiscal year with $216 billion in cash and marketable securities held by foreign subsidiaries. Right now Apple doesn’t have to pay US tax on profits earned abroad until it "repatriates" the money. But the Europeans are tightening the loopholes. Governments want money, and the tech giants have a lot of it. While trying to come up with a better tax system, some Europeans are discussing an idea of splitting a company’s worldwide tax liability among countries, according to how much revenue it derives in each country.
Assets or employment could also be yardsticks. But getting low-tax countries to go along would be tough, though. So something like the current tax system, albeit with fewer loopholes, is likely to persist for at least awhile.
As the tech giants grow and invade each other’s turf, it may turn out that the strongest force preventing them is the force of competition — each other.
