Internet Censorship. Russia, India, Syria, China, Turkey wants it. So now they're having a Conference to get it done. This needs to be stopped.

I've mentioned before that countries want to censor the Internet (http://streamabout.blogspot.ie/2012/09/india-turkey-start-to-ban-social-media.html). 

We know India tried it, Turkey did and more recently, Syria. Even the Russians are at it now. All the great bastions of democracy.

If they curtail Social Media usage, they curtail protests so they want to be able to control it. To delete websites, to deny access, to shut Social Media.

Now they have all come together under the euphemism of a Conference - The World Conference on International Telecommunications and a lot of it is behind closed doors.

Google have stated that its purpose is to "increase censorship and regulate the Internet" and it is. Russia is using overt proposals to help them censor it. One proposal is about definitions because if they can redefine "Internet" or "Internet traffic" as something else, they can control it under different, existing legislation. 

Secondly, they're trying to move control away from private bodies such as ICANN and into The United Nations where all the countries have control. The Russians, long known for their freedoms for citizens (not), call for "national governments to have sovereign rights to regulate the national Internet segment". Which would allow surveillance just for starters.

China, surprise surprise, supports them, The USA does not.

Of course, the Internet works and as they say, if it ain't broke, don't fix it but this is about Governments exercising control over the web.

We should be against it.
And we should show it up for what it is.

The Internet has allowed people in these maniacal countries, to express their freedoms and their opposition. It's a lifeline for them and more important perhaps, gives the world a voice.

Needs to be stopped.

40% of TV viewers in the US, have a second screen open at the same time. Passive viewing, turned off audiences, are hitting TV Stations Advertising.

Nielsen, the firm of TV ratings, have released new figures from October about second screen usage in the US. (The full report is here but you'll have to enlist, although for free http://www.nielsen.com/us/en/insights/reports-downloads/2012/state-of-the-media--cross-platform-report-q2-2012.html)

That is the trend where people watch TV and at the same time, use a smartphone, tablet or laptop. Indeed. Exactly as I am doing whilst I write this blog and my missus is doing the same thing - probably updating Streamabout video actually.

But both of us almost every night, are second screen users.
Which of course has a dramatic affect on TV "viewing" and certainly TV advertising engagement. Basically we're, what's called, "snacking" on TV.

Not good for the medium.

Neilsen today says we're part of 85% of adults who do that monthly and a massive 40% who do it daily. And remember, Neilsen are the bible of TV viewing so this is very pertinent. Given that not every home has a tablet or smartphone, this is also truly astonishing. 

Older people use tablets, younger use smartphones the research shows.

And it shows the power of online is preferred compared to TV broadcasters fare. Yet again, they should see this coming but they won't and they don't. 

Even if they look at Netflix usage, it averages 5 hours and 20 minutes a day! Wow indeed. TV is getting dead in the water without question. TV Advertising makes less and less sense and at one stage I was at the helm of Ireland's largest TV Advertising buyers. So it's not bias on my part, it's that the world has changed and TV broadcasters haven't.

It's pure and simple. Advertising money chases Audience and with 40% of the audience using a laptop or spending 5+ hours on Netflix, clearly they're not watching TV. And yet Ad agencies haven't got around to measuring this passive audience yet - neither have TV stations because it will mean their airtime is less valuable.

Although RTE, the Irish state broadcaster, is already starting to experience it.
In 2011, its Ad revenue is down -40% on 2007. It actually produced a deficit of nearly 17 million euro after receiving a staggering 183 million euro from Government. So if they were to stand on their own feet, without Government subvention, they'd lose circa 200 million euro. 

Government subvention to a broadcaster is also a strong potential conflict and RTE have been in hot water this year about its coverage of the Presidential Election. If your company receives that kind of investment that simply keeps you "afloat", how critical would you be of the investor? so how critical are they of Government?

So the threat of online and second screens, as shown by Nielsen, must put their future under further threat. And indeed, all traditional TV broadcasters.

It's a sea change that isn't going to go away.

Starbucks. Are we seeing the death of a brand?

Starbucks is really beginning to lose its gloss as a brand. And it's their own fault.

Under scrutiny recently about paying low tax (alongside Google, Amazon et al) it made a publicity moment by saying that it was prepared to enter talks with the UK Government in order to actually pay more tax. Good move...perhaps.

They've paid relatively little UK tax and route their profits to that transparent tax country, Switzerland.  Clever maybe, immoral definitely, but from a brand perspective....disaster.

At the same time, on almost the same day, it started a process to reduce staff benefits and by implication, is getting its staff to pay the increased tax. Faced with massive protests this Saturday by UK Uncut (http://www.ukuncut.org.uk/), it paid 8.6 million in tax over 14 years on sales of over 3 billion. Its tax practices have been branded "immoral" by The House of Commons's Public Accounts committee.

Starbucks has now decided to cut the lunch breaks of its 7,000 staff, sick leave and maternity benefits. It has also removed managers cash incentives (they now get a plaque instead - Yippee!) and workers have to sign their new employment agreement. In a real mealy-mouthed way it has done away with giving new mums on its staff a hamper and instead they get, a card with a Starbucks bib (!). I'm sure they're thrilled! Congratulation and Birthday staff cards are gone too. I'm not kidding you.

Starbucks say the two matters - tax and employee benefits - are totally unrelated, although they told staff not to discuss the new terms. But those staff are of course Social Media savvy and strong Bloggers so they've unleashed an insider Social Media army against themselves.

If you're in any doubt, you'll find them here, courtesy of The Guardian.
http://www.guardian.co.uk/business/interactive/2012/dec/03/starbucks-uk-employees-new-contracts?intcmp=239

Started in Seattle 1971, it is the largest coffeehouse in the world, present in 61 countries. 


This was a brand that had everything.
Innovation, coolness, music, store hipness and in a matter of weeks is in danger of losing it all.

The tax issue may claim more big brands, yet.

Now Dropbox comes to Dublin. For the greatly talented workforce or the highly imaginative tax rates?

 

 

My blog of yesterday, regarding the use of Ireland as basically a tax haven and allowing web companies to repatriate profits to Ireland, caused a bit of a stir. 

In essence, big companies such as Microsoft, Google, Amazon and others such as Facebook and Twitter, have been accused as using Ireland for "tax avoidance". US lawmakers recently compared us to Belize and Costa Rica.

My blog of yesterday follows this blog below, but it's also here  http://streamabout.blogspot.ie/2012/12/starbucks-amazon-google-microsoft-wpp.html


And then, irony of ironies, on the same day, Taoiseach Enda Kenny (Prime Minister) announces that 'Dropbox' are to be the newest tech company to set up in Dublin. He made it clear that Dropbox's decision was based on the old line about a talented workforce blah blah blah and not tax. Here's what The Irish Independent reported his words as;

"Ireland has many advantages to offer international companies, including our young, passionate and talented workforce, all of which will be a great asset to Dropbox as they make their new home in Dublin."

Not a mention of Tax. 

The Irish Independent also reports that "The Government was on alert last night after US lawmakers described the country as a "tax haven" and accused American technology companies operating here of using Ireland to avoid paying corporation tax at home.The US Senate's Permanent Subcommittee on Investigations has begun a probe into how American companies funnel international profits through countries such as Ireland with lower corporation tax rates than the US.Using Microsoft and Hewlett Packard as case studies, the committee chairman Carl Levin said "the tax practices and gimmicks range from egregious to dubious validity".If the US does prevent companies from using Ireland for tax purposes it could have a dire effect on the economy. Numerous companies, including Google, Facebook and Microsoft, who between them employ more than 4,000 people here, are believed to use Ireland for its tax efficiencies.A government spokesman declined to comment, while a spokesman for the IDA, which has attracted most of the firms here, said the agency was studying the report but declined to comment further."

Interesting then to turn onto Techcrunch, which I think it's fair to say, one of the most highly regarded technology publishers to see their take on the Dropbox announcement. Guess what? They reckon it's about Tax. I've reproduced it here. 

 

Dropbox Follows The Tech Crowd, Opens Dublin Office — Says First European Office Will Be Hub For International Ops

Natasha Lomas

Dropbox has become the latest tech company to open an office in Dublin — land of Guinness and low corporate tax rates. Dropbox’s Drew Houston, co-founder and CEO of what is now a 100 million+-user strong service, clearly wasn’t watching the grilling the U.K.’s Public Accounts Select Committee gave Amazon and Google on the issue of corporate tax avoidance last month. Of course it’s the tax rates, not the Guinness, which lure so many tech companies to Ireland’s green and pleasant lands. Last year we reported that setting up a European HQ in Dublin would enable Twitter to lower its tax rate by 16 percentage points — reducing its tax payments by more than 60 percent.
Obviously Dropbox doesn’t make any mention of corporate tax rates in its Dublin announcement. Its release talks effusively about the local talent pool it will be tapping into in Dublin. “We’re delighted to be closer to millions of our European customers. By opening our international headquarters in Dublin and tapping into the large talent pool that exists there, we’re better positioned to serve even more people locally while we continue to grow,” enthused Houston in a canned statement. Ireland’s Taoiseach also chips in a few supporting words, flagging up the country’s “young, passionate and talented workforce”.
Dropbox said the new Dublin office, its first in Europe, will serve as the center of the its international operations — enabling it “to better provide technical support and product acumen” to Dropbox’s millions of European users, and presumably customers in other international markets such as Asia"


In other words, it's about tax. 

Interesting too that Techcrunch reckon that Twitter by being "based" in Ireland reduced their tax by 60% - an incentive indeed and yesterday I said that nearly 50% of Irish tax revenues, comes from US multinationals "based" in Ireland.

As Europe's largest tax haven, Ireland is coming more and more under the spotlight for facilitating what is, tax avoidance, technically legal as that might be.

This is going to be damaging as Governments across Europe, notably the UK, are beginning to decide that they won't stand for it anymore. And our friends in the US are onto us too.

And it's wrong that an Irish Government should be facilitating what is, lousy corporate behaviour - legal or not.

Whilst at the same time, terrorising its citizens to pay more tax.

Starbucks, Amazon, Google, Microsoft, WPP all in the news about tax avoidance through Ireland. And now they know it.

The British Government is to explore an internationally co-ordinated new tax designed to capture the earnings of companies like Amazon, Google but also Starbucks, according to The Telegraph. The particular focus is to force online companies pay more tax on sales they generate in the UK. Some use a variety of legitimate, but certainly questionable, ways of avoiding tax. In the case of Starbucks, for example, they apply fees from their Dutch parent to minimise their local UK tax.

And it's causing an outrage against the brand. 
And rightly so.

Activist Group, 'UKUncut' has announced a day of action (Saturday Dec 8) against Starbucks and these protests are aimed at bringing Starbucks to their senses or to put them out of business. One way or the other. 

The UK Government wants to close the loop that allows web companies avoid millions of pounds on tax and in fact, repatriate a lot of it to Ireland, the lowest corporation tax economy in Europe (12.5%), to avoid paying it locally. 

There can be little doubt at all now, that the heralded Irish Government investment plan is little more than a sham, based purely on tax incentives for multi-nationals locating here. In fact, it could be said that it's based on facilitating widespread tax avoidance across Europe, technically legal as that might be. But this is why Ireland's 12.5% tax rate is under European pressure.

Up to 50% of Irish corporate tax revenue may relate to taxes paid on income earned by US multinationals outside Ireland.

I once looked after The Industrial Development Authority (IDA) Advertising so I have a good understanding of their level of expertise.....and although, applauded by Government, the truth is beginning to come out. It's all about tax.

It has been often thought as bizarre, that for a country the size of Greater Manchester, Ireland is the European HQ for Google, Facebook, LinkedIn and others. It is becoming more clearer that when companies locate here, it facilitates their tax avoidance elsewhere, such as in the UK. Tax avoidance is of course, not illegal.

Indeed, even the very British Ad Group, Martin Sorrells's WPP (part owners of Dublin Ad Agency DDFH&B and Group M), had based itself in Ireland for tax reasons and shockingly, the company is now discovered to be actually Jersey registered. One wonders why it needs to registered in a small, tiny island like Jersey known really only for its "special" tax facilitation? Good reasons, no doubt.

Amazon is also shockingly, actually registered in Luxembourg, another famed principality for its tax shelters and discreet facilities. Amazon? THE American retail success? It had used Luxembourg VAT laws to its own competitive advantage for example, charging only 3% on an ebook sold in Britain whereas other booksellers had to charge 20%. That loop is now being closed and I've been a fan of Amazon, but it's just worn thin.

Google, with a staff in the UK of 1,300 books most of its revenue to surprise, surprise, Ireland. So it earns money in the UK but funnels it through Ireland. That's Ireland's great tax regime I mean that attracts companies like these in the first place.

Actually Google's "Irish" revenue is recorded as 12.4 billion. How ridiculous is that? Gross profit in Ireland in 2011 was recorded at 9 billion!! It's truly ridiculous. 

The whole tax avoidance is unravelling and more and more are beginning to understand the tax avoidance which Ireland has been facilitating against its European partners, and most notably, our biggest trading partner, The UK. So much of these investment decisions have been PR spun as being based on attracting business to what is said, a better educated workforce in Ireland, when in fact, they are simply decisions based on tax "incentives".

And the UK are not happy about it.

For example, Amazon, last year in the UK, earned 3 billion sterling in sales. But only declared 207 million of those as being from the UK and consequently, over the last three years has only paid UK tax of 2.3 million on total sales of 7.1 billion. Shocking undoubtedly, but it's being called immoral by many, albeit utilising legal tax manoeuvres.

Microsoft in 2005 were commented on in The WSJ for routing profits from Germany into Ireland. I mean it's actually funny that one Microsoft subsidiary called 'Round Island One Ltd', is actually based in a solicitors office and turns out to be one of Ireland's greatest companies. It has 9 billion in profits in 2004 and no staff. Not bad eh? And nobody has ever heard of it.

Google, paid UK tax of a tiny 6 million on UK revenues last year of 2.5 billion. Wow.

Ireland is helping them do that through "phantom" services.
Ireland is Europe's biggest Tax haven, followed by Switzerland.
And Ireland's tax schemes are now coming under the spotlight as it starts its European presidency from January 1st.

But more importantly, it's making the lie told by successive Irish Governments that Ireland was somehow an attractive base because of its workforce, its green fields, its beautiful scenery.

And it's wrong.
And we need to say it's wrong even if it's to our own detriment.