Brawls.com

Tech giants v governments

Fri Nov 20 2015

Business

The insults are getting sharper. Tim Cook, the boss of Apple, has said it was “incredibly dangerous” and “another attack on our civil liberties” for America’s government to ask technology firms to hand over users’ personal information. American officials want to be able to read the textual communications of suspected bad guys. This jars with Apple’s desire to keep its users’ personal information encrypted and private. 

This is just one instance in which tech firms and governments are not seeing eye-to-eye. Even sharper clashes will come in 2016, across several fronts. Law-enforcement officials will keep pressing tech firms like Apple to hand over data, and tech firms will resist, claiming they are on the right side of consumer privacy. Regulators will fire back accusations that the tech firms’ own privacy policies are lax. 

The heaviest attacks will be in Europe. Watchdogs in France, Belgium, Italy and Spain are said to be looking into Facebook’s collection of data on users; the European Union will deploy an enhanced “data-protection directive” with big fines on firms that fail to follow its strict rules on data protection. Google will clash with antitrust officials, who have denounced its dominant market share and alleged that it has favoured its own services. 

The “on demand” economy will also command attention. Firms that connect users to workers via smartphone apps, as Uber does with drivers, have surged in popularity, but they are facing resistance. Regulators are debating whether firms like Uber should be allowed to operate and with what restrictions. In 2016 at least one state in America will also determine whether those who work for Uber should be considered freelancers, as the company claims, or employees entitled to benefits, pensions and certain protections: California’s closely watched court case, brought by some of Uber’s drivers, will be decided in 2016, with big consequences for the firm’s business model.

Big tech firms’ taxes will be in the firing line too. “Transfer pricing” might sound like a topic for a dull accounting class, but it will loom large in global politics in 2016. The practice involves ascribing foreign profits to local subsidiaries in low-tax jurisdictions. As a result, American tech firms are storing hundreds of billions of dollars abroad. Governments, including America’s and Britain’s, will put greater pressure on large tech firms to pay up. 

Until now, consumers have remained mostly indifferent to all this sparring. They are fans of firms like Apple, Google, Facebook and Amazon, which have brought them fabulous computers, free information, old friends and new shopping experiences. However, if tech giants are perceived to abuse their powerful positions and not act in consumers’ best interest, while handsomely enriching their executives, consumer sentiment could quickly shift, and create an even bigger techlash.

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