Vestager tasted defeat, but she shouldn’t stop chasing Big Tech | Business


Apple’s legal victory over Brussels last week seemed at first glance to be a huge boost to all international companies looking for the lowest corporate tax rates in Europe.Officials at the European Commission, the executive arm of the EU, claimed the tech giant saved more than 13 billion euros (£ 11.8 billion) in 10 years after signing a tax deal with Dublin in connection with an alleged flagrant violation of state aid. rules. The EU’s second-highest court disagreed, saying Ireland had played a direct role in its relationship with Apple and ticked all the technical boxes to make the deal happen.

Paschal Donohoe, the Irish Minister of Finance, took an indignant tone when he said that the decision “will prompt many people to reassess their views on our corporate tax system and some of the statements that have been made about it.” ”

He was talking about activists who have spent years trying to create a level playing field across the EU to prevent companies from playing one country against another to lower effective tax rates.

Ireland and the Netherlands are among a group of persistent suspected violators determined to attract international companies who would deem countries too small for an international headquarters without hefty tax cuts.

One of those activists is EU Competition Commissioner Margrethe Vestager, who initially spoke out against Apple and must now consider appealing. The word in Brussels is that she will, but more out of pride than a calculation that she can earn.

Since 2016, when Dublin appealed its decision, the technical arguments have been fully repeated and a final judgment from the European Court of Justice – the highest court in the EU – will probably not find anything new to base on which would be an extraordinary reversal.

There are those who might consider Apple’s tax department, and the officials who accepted the deal that gave the California-based company a 1% effective corporate tax rate, to be Vestager’s nemesis. If it cannot win when the tax cut is so important and the preferential treatment so obvious, it must be a broken color?

Vestager is made of tougher stuff. Dublin has been forced to charge higher tax rates for some time now. The pandemic also highlights the shortcomings in the tax collection of many countries and gives those who seek recourse greater leverage. The efforts of the Organization for Economic Co-operation and Development think-tank to halt tax rate erosion and profit shifting to low-tax regimes have helped, after is making progress in establishing ground rules for countries.

Vestager is also shifting its focus to antitrust issues to tackle Apple. Just last month, it launched a full investigation into how the California giant charges digital content providers like Spotify a 30% fee for using its payment system for any subscription sold through iTunes.

The charge is that Apple is channeling its iPhone and laptop users through its own services and doing everything in its power to exclude its rivals, including collecting fees.

No one should doubt the difficulty of preventing large multinationals from exploiting their market power. The United States has given up on trying under President Donald Trump, who is so weak in the face of corporate lobbying that he has pushed many free market supporters into the arms of the Democratic Party.

There is ample evidence that consumers in the United States pay higher purchase prices for basic technology than in other regions, because Congress has allowed monopolies to dictate what they charge.

Vestager is right to push back. Tackling Apple and America’s other tech giants won’t be easy, but monopoly charges are a tax on consumers. The only regret is that the United Kingdom has withdrawn from the EU, leaving itself open to exploitation that the EU seeks to limit.

Branson returns to superhero mode to help save Virgin

Anyone who is forced to spend £ 200million on a birthday present for themselves could be forgiven for being a little disheartened – especially when it’s something they already own and can’t be. sure that it will still work in two years. However, as Sir Richard Branson, investing another fortune in Virgin Atlantic at the age of 70 this week, has shown time and again, he is one of life’s optimists – and still a magnet for it. other people’s money.

The bailout deal for the airline he founded in 1984 could be seen as a decline in ambition: Branson funded his cash injection by selling a large stake in Virgin Galactic, his space travel business. Some might think there was a better future now by exploring life beyond our virus-infested planet. Likewise, sister companies have grown in a more similar fashion during the Covid-19 era: both are clinging to fares from potential passengers who are desperately hoping that one day a Virgin ship will fly.

And yet, despite all the criticism the Branson Empire has drawn for initially seeking taxpayer support while being sheltered in the Virgin Islands, the announcement is a triumph over adversity that the mogul will relish. . There has not been a loan guaranteed by the Treasury of the type that other airlines have received. And while Virgin has taken drastic steps to cut costs and cut thousands of jobs, it has escaped the reputation mud that has covered the wings of big rival BA.

At 70, Branson reaffirmed his primacy as majority shareholder of Virgin Atlantic – a status that Willie Walsh, boss of BA owner, IAG, had predicted that the tycoon would have lost long before, in their famous bet “knee in oldest boy”. Given Walsh’s current struggles as he delays his retirement to oversee the controversial dismissal and rehiring of BA staff, Branson’s £ 200million may at least have given him some local satisfaction. Why ask for the moon?

Netflix apparent heir must be ready for new episode

The rise of Netflix content chief Ted Sarandos to co-CEO is the first step in planning for a smooth power transfer when founder Reed Hastings finally retires.

Sarandos, 55, who was also elected to the Netflix board of directors, is a natural and uncontroversial fit as an heir, having worked alongside Hastings for 20 years. He joined Netflix in 2000 as a DVD buyer, three years after its inception as a DVD rental company by mail.

Sarandos controls the $ 17 billion content budget for Netflix, the engine of its skyrocketing growth over the past decade, which has seen it attract nearly 200 million subscribers worldwide. He spearheaded Netflix’s shift to original content, which has become critical to the company’s long-term success as major content owners increasingly retain hit shows for their own rival streaming services.

Hastings described the appointment as a formality, acknowledging that the industry had long considered Netflix to be run by a two-man group, except in the official job title, adding that it “was part of a long planning process. of the next generation ”.

The 59-year-old said he has no plans to move away from Netflix for a decade. But as a deep-pocketed media channel finally battles the streaming wars, it makes sense to clear up investors to prevent the issue of succession from becoming a major distraction in the years to come. Hastings says the early decision to name a successor means there are “many years to be successful in this area” before he leaves the company.

The pandemic led Netflix to add 26 million subscribers in the first half, 2 million less than the total for 2019, as consumers seek locked-in diversion.

However, it now faces a new wave of competition including NBC Universal’s Peacock, AT & T’s HBO Max, Disney +, and Apple TV.

With the company’s shares falling 10% after saying it expected a much lower number of new subscribers than analysts had hoped, Netflix and its management must now prepare for the bigger challenge. to its domination of its history.


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