The Big Story: Truce on tech taxes, for now. The United States and France have agreed to a temporary truce on a controversial French digital services tax, even as other countries continue moving forward with plans to impose their own digital taxes on Internet platforms.
French Finance Minister Bruno Le Maire said he reached a deal with U.S. Treasury Secretary Steven Mnuchin at the World Economic Forum in Davos this week to delay collecting the digital tax until December. France’s plan would levy a three percent tax on online platforms that have a global revenue of over 750 million euros and 25 million euros in France. In exchange for the delay, the U.S. agreed to back away from imposing retaliatory tariffs on French goods, which President Donald Trump previously said could reach 100 percent on $2.4 billion worth of French goods.
Several other countries—including Italy and the United Kingdom—that are pursuing their own digital taxes received a rebuke from Secretary Mnuchin this week, who warned that they could also face retaliatory tariffs if they move forward with their plans. Although the taxes are targeted at large technology companies, we remain concerned that the added administrative burden and tax liability that these companies face will be passed down to the users and startups that rely on these platforms for their services. Additionally, a country-by-country approach to digital taxes would result in a confusing patchwork of international laws that would be especially harmful to tech companies of all sizes and their users.
Policy Roundup:
Workforce shortage hindering 5G deployment. Senate Commerce Committee Chairman Roger Wicker (R-Miss.) said during a panel hearing this week that some estimates show that the U.S. needs approximately 20,000 additional workers to help deploy 5G wireless networks across the country. Members of the committee expressed concerns that workforce shortages will limit the deployment of the next-generation networks, potentially allowing other countries to take the lead in 5G development.
Weak encryption protections harm everyone. A coalition of advocacy organizations and experts, led by the Project on Government Oversight, wrote to Attorney General William Barr with concerns about how creating “backdoor” access into encrypted devices for law enforcement officials would impact election security. As we noted earlier this week, the Department of Justice’s request for tech firms to build intentional vulnerabilities into their secure encryption protections would be especially harmful to startups that lack the resources and ability to constantly monitor and defend backdoor weaknesses.
GDPR enforcement has led to $126 million in fines. A new report from global law firm DLA Piper found that European Union regulators have levied 114 million euros—or $126 million—in fines on companies and startups for privacy-related data breaches since the General Data Protection Regulation went into effect in mid-2018.
Companies struggling with data disclosures under CCPA. Compliance with the California Consumer Privacy Act—the Golden State’s aggressive data privacy law that took effect at the beginning of the year—has been all over the map, according to a Washington Post examination. CCPA has essentially become the nation’s de facto privacy law in lieu of a federal data privacy framework, but companies are already struggling with how to respond to consumers’ data requests and what information they’re required to provide.
TED Talk highlights flaws in patent system. Priti Krishtel—the Co-Founder and Director of Treatment Access of I-MAK—explained in a TED Talk last month how drug companies are exploiting loopholes in the U.S. patent system in order to build monopolies and block out competitors. Krishtel offered five potential reforms that would help keep large firms from exploiting existing patents and stifling innovation.
UK moving forward with new child privacy rules. The United Kingdom’s Information Commissioner’s Office this week sent new child privacy rules to Parliament that would block online platforms and apps from encouraging minors to provide any personal information to the sites. Any platform found in violation of the new rules would be fined four percent of their global revenue.
Startup Roundup:
#StartupsEverywhere: San Pedro, California. Braid Theory, a strategic advisory firm for entrepreneurs, is proving collaboration works by helping startups enter the marketplace and gain access to their customers.
Report finds startup investments are up despite drop in VC funding. A new report from CB Insights and PWC found that startups received $108 billion in investments from U.S.-based venture capital firms last year—the third-biggest year ever for the U.S. startup economy—despite domestic VC funding falling in the last quarter of 2019.
