This month, G7 leaders agreed a ‘landmark’ deal committing to a global minimum corporation tax rate of at least 15 percent. The deal will most likely mean that Amazon, Google and Facebook – despite declaring relatively few profits in the UK – will pay more tax in this country. Chancellor Rishi Sunak has celebrated this new agreement as a major achievement of the summit and a ‘huge prize’ for the UK taxpayer.
Politically, this does not seem overly controversial. In terms of profit alone, 2021 has been an excellent year for the ‘Big Five’ (Google, Apple, Facebook, Amazon and Microsoft). The shift to working from home has accelerated the uptake of digital technology across all areas of life. More people are working, shopping and socialising online. This has been reflected on the Big Tech balance sheets. In 2021, Microsoft increased its profits by 31 percent compared to the year before. Amazon’s profits more than tripled in the first three months of 2021.
Less headline grabbing than this new tax commitment was the virtual meeting which took place in April between Oliver Dowden (Secretary of State for Digital, Media, Culture and Sport) and his G7 counterparts. Leaders from the G7 signed a declaration outlining a series of principles on how to tackle the challenge of online safety. One of the principles is ‘ensuring that tech giants should have systems and processes in place to reduce illegal and harmful activity and making child protection a priority’ – a principle also embedded into the Online Safety Bill, a major piece of domestic legislation that is currently going through its prelegislative stage in Parliament.
From the Home Secretary publicly calling out Facebook on child safety to the establishment of the new Digital Markets Unit, all this evidence suggests that the UK Government is finally facing up to Big Tech. Conveniently for the UK, this agenda is now one shared by the United States and the President. Just last week, Joe Biden hired Lina Khan, a vociferous critic of Big Tech’s influence, as a top federal regulator. This follows the introduction of five new bills into Congress recently, all aimed at limiting the power held by Big Tech companies.
With the USA and the rest of the G7 all seemingly on board with more regulation of Big Tech, and the imminent arrival of far-reaching legislation aimed at making online platforms more responsible for what they host, the UK Government will be sensing an opportunity. While ‘world-leading’ might be a term that some think is overused by politicians in this country, there is an argument that the Online Safety Bill will be just that.
Some people are naturally inclined to feel uneasy about the astronomical profits of Big Tech, which in part have been driven by the pandemic. Some also feel that social media companies like Facebook do not do enough to combat online abuse and scams. Others, however, point to the role which Big Tech has played in keeping people connected during lockdown. Whatever your opinions on the role of Big Tech, one thing is almost certain: more regulation is coming, both in this country and globally.
by Charlie Allen, Senior Account Executive