We don't like that thing that you do. So we'll just apply taxes and let you continue doing the thing we don't like you to do.
"Tech giants" of the past and present like IBM, AT&T, Microsoft, Facebook, Oracle, Uber, and Amazon are all widely disliked and criticized.
Aside from that there are plenty of European tech companies (ASML, Logitech, Skype, Spotify, just to name a few) the attitudes in Europe tend to be different. Attend one of the Silicon Valley conferences where it's all "we're going to change world!" vs. the German CCC where it's "we're not sure if society as a whole benefits from this technology".
There are probably other reasons too. Silicon valley and that Chinese city I forgot the name of are powerful "tech hubs" where workers, innovators, and investors meet. Europe lacks such a powerful "hub". I suspect the most important reason for this is that "Europe" isn't a single country but dozens of countries. Even in the EU – where you can legally move to another country at a whim – it's not so easy, as you may not speak the language.
This is why the UK probably has more EU immigrants than many other countries, since most people speak some English.
And sure, perhaps taxes can be a factor? I'm unsure of it, and I've never seen it proven, but I am willing to be convinced. Either way, it's certainly a lot more complex than "taxes kill innovation".
What you see is that - if the Czech Republic would have their own tech giants - they wouldn't propose such an aggressive taxation towards it. It's why Germany was against such taxes because they fear repercussions towards their own industry.
> But a predatory attitude focused only on their own growth and "to hell with everyone else".
Such a predatory attitude also gets punished through free market forces. A company like Microsoft got severely punished for their predatory behaviors.
One of my favorite tech giants is 'Robert Bosch Stiftung' from Germany.
> Aside from that there are plenty of European tech companies (ASML, Logitech, Skype, Spotify, just to name a few)
ASML is the meager remnant of the once almighty Philips. Logitech is Swiss. Switzerland indeed does a better job providing a healthy climate for innovation. Skype is owned by Microsoft. Spotify is indeed a lovely company (worth protecting for sure).
> Europe lacks such a powerful "hub".
This is indeed a problem. San Francisco provides an excellent climate that attracts innovation. An important factor was perhaps that there was so much room to grow. The right city at the right time. In Europe most of the land is already accounted or planned for something.
China got to grow so quickly exactly because the government decided to embrace free market forces.
> This is why the UK probably has more EU immigrants than many other countries
Many wealthy people migrated from France to the UK when Hollande proposed his tax plans.
https://www.businessinsider.com/small-business-owners-explai...
Now we see France giving all kinds of tax breaks to lure UK companies to France after Brexit.
Wait, if the company was in Czech rep. it would pay taxes there already. Or what am I missing?
Then if you apply specific "personal data taxes" they would come on top of the regular taxes already payed by your local tech giant. If such a tech giant would exist.
The way this should be balanced out is by stimulating counter-innovation coming from Europe. Not by taxing innovation coming from foreign countries.
Your "free market forces" argument comes straight from the 70s. How much more abuse are you willing to tolerate before it becomes blindingly obvious that market forces don't punish companies except if they don't make money.
Microsoft was punished by the government, i.e. the law, not the market. And how did the market forces punish Facebook for the colossal fuck-ups? Because even after expecting a 5 Billion fine their stock was up.
Saying that market forces punish predatory attitudes is beyond the pale. It's gaslighting and ignorance rolled into one.
Skirting laws (Uber, Airbnb, Amazon), giving worker protections a runaround (any gig economy company) or destroying privacy (Google, Facebook, MS, many more) is not the kind of innovation this planet needs.
I wholeheartedly disagree. There has been a huge active community rigorously battling Microsoft's dominance offering alternative technologies and innovations. They deserve all the credit for maintaining the balance. Not government.
> And how did the market forces punish Facebook for the colossal fuck-ups?
Facebook has become less and less popular in recent years. Exactly because people got concerned with those colossal fuck-ups. So you see Facebook on the fence of those things and trying to improve their company ethics.
> Saying that market forces punish predatory attitudes is beyond the pale. It's gaslighting and ignorance rolled into one.
This is perhaps the popular opinion in Europe. Do you completely deny the existence of corrective forces? It seems to me a the US is doing a far better job at embracing them and has a lot of its innovative success to thank for it.
Let's not forget that tech giants often don't pay any taxes to eu countries. Like zero. This is real problem for system based around taxes. It also puts smaller players that have to pay at disadvantage.
This is just way how to tax the giants. I thin soon this is going to be normal and probably even higher.
Microsoft was steamrolling over the huge community battling it, including Apple, Netscape, Sun and Linux.
United States vs. Microsoft Corp forced them to behave, otherwise that huge community would have had to battle them from beyond the grave.
Facebook is a very profitable behemoth. Where exactly is the punishment? Oh, they have to improve their company ethics.
First Amazon launched their online book store. Then Microsoft made a $150 million investment into Apple. Then Google launched its search innovation. Linux and Apache were already hugely successful with dominating the web. Java and PHP were kicking ASP's ass.
https://news.netcraft.com/archives/2019/04/22/april-2019-web...
Microsoft got so much distracted by certain market dominance they totally missed the uprising of the web players. Then Valve released their app store, Apple released the iPhone including its app store, Google released Android and Microsoft saw its dominance fall apart. The settlement didn't contribute to any of these developments.
So what happened is - because Microsoft was so dominant - the competition needed to seriously up their innovative game to conquer their positions. If government would have intervened more strongly there wouldn't have been the need for stronger competition which would have resulted in less innovation. The market corrected itself.
Amazon was utterly irrelevant back then, they were a book store FFS. The investment into Apple was happening in the middle of the anti-trust fight, for crying out loud. And Google was invented also during that time and would have gone exactly nowhere with an IE monopoly.
MS crushed Linux on the desktop and they use it just like anybody else on the server. They even included it in Windows, Linux for them is not a competitor, it's a tool.
How did it permit Google to exist? Google was running fine on IE.
> Amazon was utterly irrelevant back then
It was busy growing into the giant it is today. Nobody saw that coming back then.
> And Google was invented also during that time and would have gone exactly nowhere with an IE monopoly.
Why would an IE monopoly have prevented Google? Google came into existence exactly when Microsoft was dominating the browser market. Microsoft wasn't set out to dominate the web. They were pretty much embracing the dotcom boom (which included Google). They just wanted to make sure you would be browsing the web using their OS.
> Linux for them is not a competitor, it's a tool.
How is being a tool not a measure of success? We all use Windows as our tool. Linux was simply dominating its market.
You paint a grim picture of a predatory company trying to dominate the world. Meanwhile Microsoft was exactly so successful because - on the one hand - they allowed other vendors to create hardware for their OS and - on the other hand - Windows was very much geared towards other companies building software on top of Windows. Sure, Microsoft was taking some protective measures to solidify their business. But what you're implying is that - without the antitrust case - they would've gone straight against their own business model that made them so successful.
I will grant you the 150 million investment into Apple. That would perhaps not have happened without the antitrust case. Perhaps there wouldn't have been an iPhone. But what's often overlooked is how Steam was actually the first app store with auto-update features. Apple wasn't the only player in the mobile market. Android was already under development 4 years before the first iPhone came out. Google had already acquired Android 2 years before the first iPhone came out.
It's all pure speculation. But the fact is there were plenty of corrective/competitive forces. Who knows what would've happened without the antitrust case. I'm not convinced it would have resulted in Microsoft being able to maintain its dominance.
For example on my point about Europe's fragmentary nature due to the different languages you reply with some observations about ... France's tax rates? Okay...
This is not really how conversations work.
What's ironic is that those language barriers are exactly solved thanks to translation innovations coming from the US. I'm now able to communicate much more easily with fellow Europeans.
I truly believe we have a problem in Europe where there's too much focus on welfare and government control at the cost of free market and innovation. Too much "system thinking" as opposed to creative engineering. This used to be different a couple of decades ago.
I think you are underestimating the language and cultural barriers inside Europe. When I still lived in the Netherlands (my native country) we got a British employee at some point. Everyone in the company spoke English reasonably well, but not quite fluently. So what happened was that lunch conversations started out in English but quickly evolved to Dutch. I felt bad about it, but it was just so much easier to joke around in Dutch.
This also mirrors the experience of my British ex-girlfriend, who lived and worked in the Netherlands.
After this I lived in the UK for two years while working remote for an Irish company, and it took me a while to truly communicate efficiently with native English speakers. I knew the grammar and vocabulary, it just wasn't always obvious how to use it. People have made entire charts about miscommunications[1]. I also wrote a bit about this elsewhere[2].
It's one thing to argue in English on HN or watch Star Trek, but quite another to actually work in English every day. Perhaps it might actually be easier is everyone is a non-native speaker, but then you quickly run in to the "large group of natives speaking their own language"-problem I described before.
In addition, actually living in a foreign country is also a bit harder if you don't speak the language.
Either way, the barrier is certainly higher than in the US or China, where everyone just speaks the same language.
[1]: https://pbs.twimg.com/media/B0jvF8NIMAAFIn6.png:large and https://merican.vickihollett.com/wp-content/upLoads/anglo-du...
[2]: https://lobste.rs/s/xnjo8g/add_downvote_reason_unkind#c_imbo...
> too much focus on welfare and government control at the cost of free market and innovation. Too much "system thinking" as opposed to creative engineering. This used to be different a couple of decades ago.
Wasn't there much more welfare several decades ago? This certainly seems the case in my own country of the Netherlands, and it was also true in the UK (until Tatcher came in). I can't speak to other countries.
I'm not convinced these things are strongly correlated to creativity or innovation. It seems to me that the primary reason people create things is because humans are just creative; it's part of our nature. Certainly if I look at my own motivations the amount of money going to the taxman is pretty far down the list of why I do things.
Additionally, not everything is about economics. I have some amount of sympathy for libertarianism/free market thinking, but too often does everything get reduced to merely an economical argument. The world is more than just economics. In Germany they've been having a large debate about the ethics of driverless cars, for example, whereas in the US they've just put the cars on the road without first having a public debate. It may be more "innovative", but is it also the right thing to do?
https://www.cpb.nl/sites/default/files/publicaties/download/...
As welfare spending increased we started losing our ability to innovate. We lost DAF cars (1972), Fokker (1996) and Philips has become a shadow of what it used to be.
So take a company like Philips. Before they brought technical innovations like color television, the VCR and Compact Disc. I believe product development has since shifted from hardcore engineering design (technical) towards industrial design (art). Philips now believes it's all about "consumer lifestyle" as opposed to developing the next technological breakthroughs. Since then the consumer divisions pretty much died and all that remains are the consumer-less engineering divisions (ASML and Philips healthcare).
How did this happen? I believe the welfare attitude plays a big role. People have gotten too comfortable. The education system is part to blame as well. Colleges and universities trying to lure students with sexy programs and the promises of sexy careers (that no company needs). Engineering usually isn't on that list of sexy jobs.
In the US people seem to better understand you need to work hard to move forward. A job is more about the value you can provide as opposed to the value you receive. It seems we understood that better in Europe a couple of decades ago.
At best the countries find "niche" in tech. For example for Czechia it's been security - AVG, Avast, Eset and Kerio. Tooling - InteliJ, Netbeans. And gaming - apart of big merger+acusition which led to 2K czech you have many smaller players like Madfinger.
Also kiwi.com is czech so it's not like there completely no tech scene. Education is great.
It's just mindset is not so much go big or go home. People in europe seem to be ok with moderate success.
A 7% tax on revenues is a 50% tax on a business with a 14% margin. It's even more damaging when one considers start-ups, who run negative profits in their early years. (Seven percent is thus eleven months of runway in the Czech Republic for every 12 months a German competitor gets.)
Seven percent is generally prohibitive to low-gross margin business, e.g. any tech company producing physical devices or doing anything next to retail. It thus compresses an economy's accessible tech sector to enterprise businesses.
If these taxes remain confined to ad-driven businesses, that's a fair tradeoff. But given Europe's penchant for over-encroachment, it could very easily be over-applied.
TL; DR Top-line taxes transfer wealth to high-margin businesses over low-margin businesses and from start-ups to incumbents.
Income and corporate taxes are so easily manipulated that there's entire industries built around it. Nations should be aiming for efficient taxation sources not ever more complex regulations creating yet another industry sector to simply navigate it.
This sounds like a bad idea, so I had a look at the article to see what "innovation" was being taxed.
Innovation is a "new idea, creative thoughts, new imaginations in form of device or method". (source: merriam-webster.com)
Plugging in our definition of innovation, the question becomes:
What is the new idea, creative thoughts, new imaghinations in form of device or method that trigger this new tax in Europe?
First the article says the UK gov't wants to tax "companies whose business model requires the active participation of U.K. users in creating content, being targeted with advertising or linked by intermediary platforms."
Is collecting user content and serving ads "innovation"? That is what triggers the tax.
What if we just collected user content, maybe charged a fee? No ads. Do we get taxed?
Second, it says the Czech gov't wants to tax companies with "advertising and personal data sales as the primary base" as well as "sharing economy platforms". The article says the tax "prioritizes targeted ads".
Is selling advertising and personal data "innovation"?
What if some Czech programmer make an Uber or AirBnB style app but do not sell advertising or data? Do they get taxed?
Third, it says the French gov't wants to tax "platforms that put users in touch with each other for a fee".
Is putting users in touch with each other for a fee "innovation"? Does that make ad-supported companies that do this exempt?
What if a company sells native software that puts users in touch with other, peer-to-peer. Is that a "platform"? If not, do they get taxed?
What is their definition of "platform"? Under the Wikipedia definition, the internet itself is a "platform".
As always, the devil is in the details. We need to see the text of these tax laws.
Finally, the article discusses the merits of the "[t]axing advertising that is based on personal data".
Is advertising based on personal data "innovation"? What loss would we, the majority, suffer if this particular innovation were taxed?
Is it possible to have "innovation" that does not involve advertising based on personal data? Of course. That is the kind of innovation I prefer. I am using some to write this comment.
We will not lose the benefits of personal computer-based innovations simply because we take away the financial incentive to collect personal data and serve ads. That is not the raison d'etre for the type of innovation we seek to encourage. It is the advances in hardware and networking.