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Oct 15, 2021 12 min read

🚀James T Kirk Goes Where Others Have Gone Before | BigTaxes for BigTech | TikTok go Shopping | Facebook

Wiser! #40: James T Kirk goes into space; BigTech are about to get Big Taxes; TikTok pushes into e-Commerce as Amazon shuts down China; and Facebook's woeful damage limitation.

Table of Contents

In this issue of the Wiser! Newsletter;

  • The global tax deal that will affect BigTech
  • TikTok's move into e-Commerce and China's role in it
  • Is there a better business model for social media?
  • Facebook's woeful attempt at damage limitation
  • William Shatner is the oldest human to go into space
  • The Wiser! YouTube channel goes viral (at last)
  • Plus half a dozen Snippets of Insight and Information

Credit: Francis Scialabba

How the global tax deal impacts BigTech

An agreement to set a 15% global minimum tax rate was reached by 136 countries last week. This means that Big Tech giants like Amazon, Facebook, Google and Apple will be required to pay taxes in nations where their services and products are sold, even if they have no physical presence there.

The OECD-led "global tax deal" was signed by countries that included the USA, China and all the nations in the European Union.

The purpose of the new tax deal is simple: to ensure that the world’s 100 or so biggest companies (with revenues over $750 million) pay taxes fairly and equitably on their global operations and sales without the jiggery-pokery they currently employ to avoid paying tax.

Such as designing a mobile phone in one country, building it in another and selling it in another...meanwhile booking all profits in low tax economies like Ireland or Luxembourg that played no part in the life cycle for the product or service.

Examples of tax optimisation include Facebook paying just £7.4 million in UK corporation tax in 2017 despite generating £1.3 billion in revenue from its users.

On announcing the deal, Mathias Cormann, the secretary-General of the OECD tweeted;

The new rules are estimated to generate an additional $150 billion in yearly tax revenue from major corporations. It will also address the inequality of tax payouts for some of the poorest nations in the world. Facebook, Google and Microsoft have been accused of failing to pay a fair amount of taxes in poor countries where governments are struggling to provide even basic healthcare or education to their citizens.

The anti-poverty charity ActionAid International estimated that BigTech is exploiting loopholes in global tax rules to avoid paying as much as $2.8bn tax a year in developing countries.

The global tax deal sounds great in theory and is, IMHO, long overdue. However, the fine print does provide room for manoeuvre and allows for low tax economies like Ireland to continue to compete on tax rates.

Under the terms of the new deal, Ireland will be keeping their corporate tax rate at 12.5% as it has been since 2003. This has attracted some of the largest US tech firms, including Facebook, Google, and Apple, who have all set up their European headquarters in the country.

Personally, I'm cynical about the prospects for the global tax deal, however well-intentioned it is. Regulations always follow, they rarely lead the way in these matters. Super smart people and corporations with deep pockets will just find new ways to win in the legitimate game of "tax avoidance".

As Donald Trump once said, not paying taxes "makes me smart". Although not so smart as to realise that it was a dumb thing to say during a Presidential election campaign.

Sources: Politico, New York Times, Guardian

Source: Four Week MBA

Would you pay for Social Media?

Social Media gets a lot of flack and it's not just Facebook in the wars.

The issue is that the social media business model is based on advertising revenues which creates a conflict of interest over privacy. (Did you know that every Facebook account is worth $40/year in advertising revenues.)

Services like Instagram, Google and Twitter are free and you/us/me are the product. These businesses monetise the data they have about our behaviour on the Internet to pay for the "free" services we make use of.

So, earlier this week I asked the question, "would you pay for social media?" in a poll on Linkedin. The context is that if you could pay for a service and it meant that the algorithms were not geared to feed you content that kept you engaged, enraged and online, or track you so that the data could be used to target you, would you pay for that?

The poll had over 44,000 views and collected 626 votes. Here are the results;


Amongst the 62 comments, a recurring theme was the shift to a decentralised social media approach where they paid you for your data. I got some interesting leads to pursue and will be writing about this space shortly.

Neeva is an ad-free subscription search engine

Earlier this year I made contact with the founding team at Neeva, a subscription search engine that has now launched in the USA. They have built a service that does not rely on advertising revenues, which means they have little interest in tracking you around the Internet.

You can read my conversation with the ex-SVP of ads at Google, Sridhar Ramaswamy, the co-founder of subscription search engine Neeva, here in the new section called Wisdom!

NEEVA - flipping the search engine business model on its head
Neeva is a subscription search engine that does not rely on ads. Unlike Google, who dominate Search, which means they’re tracking your every move.


TikTok take advantage of the Amazon ban on "made in china" accounts

When anyone asks me a "what's next in tech?" question, one answer I always give is, "watch TikTok and what China is doing to promote international e-commerce".

BTW, I don't mean join the billion people a month who spend hours watching 15-second clips of dad dancing. I mean watch out for what TikTok and its Chinese parent company Bytedance are doing next as they take advantage of the Chinese Government's push to create cross-border e-commerce trading zones.

Regular readers would have heard me say many times that TikTok is a very addictive platform. It collects more data signals to understand each individual user than any other social media platform. This is what makes it so sticky and perfect for selling to a captive audience.

The latest reports are that TikTok plans to release a stand-alone app and expand its online shopping capability to take on the e-commerce giants of Amazon in the West and Alibaba in the East.

This all comes against the backdrop of what China is doing to promote international e-commerce by lowering export taxes and government fees. China is actively supporting the growth of online e-commerce businesses. For example, the Shenzhen Municipality (the so-called Silicon Valley of China) recently announced it would award 2 million yuan (c$310,000) to qualified Chinese merchants for each independent online store they launched.

It is no coincidence that ByteDance's move comes hot on the heels of Amazon's removal of an estimated 50,000 accounts of third-party sellers in China earlier this year. This has cost Chinese e-commerce merchants an estimated 100 billion yuan and stems from allegations that Chinese merchants used fake reviews and violated other rules, even though it is customary in China to give gifts to customers that write favourable reviews.

As a result of the Amazon ban, many of the "made in China, sold on Amazon" merchants are now looking for other ways to reach customers, which makes them an easy target for ByteDance's new service.

ByteDance is already building a domestic e-commerce capability in China and launched its own mobile payment service in January this year. Outside of China, ByteDance has begun rolling out e-commerce features on TikTok, including a Shopify integration that lets businesses add a shopping tab to their profiles (similar to what Facebook did last year.)

It is being reported that some e-commerce sites and factories in China are already using TikTok to reach shoppers in North America and Europe, even though the app is technically not available in China's app stores.

It is too early to say whether TikTok's Western users will want to try a new shopping service connected to their app. However, data from US Customs and Border Protection indicate that Americans are becoming increasingly comfortable buying goods from overseas companies directly, instead of relying on traditional domestic retailers.

The total volume of small packages imported into the US increased by 28% last year, even though the overall number of international mail shipments decreased by 19%.

Finally, I'll leave you to ponder this quote from Rui Ma, a tech analyst and the founder of the podcast Tech Buzz China, "most Chinese entrepreneurs think Western e-commerce is backwards compared to China."

Sources: Business Insider, Gizmodo, South China Morning Post

Read this issue of Wiser! for more on What's the Fuss about TikTok

Wiser! Newsletter: Microsoft, TikTok, Coinbase and AR
Newsletter #9: Microsoft score $20bn AR deal with US Army, TikTok’s awesome signal liquidity, Coinbase goes public, and more strategic insights from the Tech Economy


The Metaverse is coming to Premium Members

The next issue of the Wiser! Newsletter will be a feature essay on the Metaverse, explaining what it is and what it means. It will be delivered to Premium Members on Tuesday 19th October.

Premium Members enjoy extra content from the Wiser! Newsletter and have unlimited access to every article and newsletter on the Wiser! website.

Check out the Premium Subscription here (and if you're not satisfied there's a 30-day money-back guarantee).


Facebook's woeful attempt at damage limitation

Nick Clegg is the global face of PR for Facebook. UK readers will recognise Nick Clegg as the former deputy prime minister and leader of the Liberal Democrats.

In the wake of the recent fallout from The Facebook Files, the whistleblower testimony to US congress, and the global outage that took Facebook's network offline for over 5 hours, Clegg did the rounds on the weekend's news shows to explain Facebook's position.

He used his skills as a politician to deflect and try to reshape the narrative. Clegg claimed that Facebook has invested $13 billion to make the platform safer, which he said was "more the total revenue of Twitter over the past 4 years".

I'm not sure of the relevance of that comparison other than it was an opportunity to name another social media platform that has has its fair share of criticism (but remember, Twitter is only 1/10th the size of Facebook in terms of user numbers).

This was a PR exercise from Clegg that basically said Facebook was listening and taking things seriously, but that all of the examples being cited were mostly unintended consequences.

Another line of defence was that they could not change human behaviour (it's the user's fault for sharing misinformation or continuing to read content that was doing them harm) and that the data about the harm to teenage girls had been taken out of context and had been mischaracterised.

Clegg said that Facebook is going to turn the dial down and reduce the presence of politics on people’s feeds. He claimed the move stems from user feedback that said “more friends, less politics.

This was a neat soundbite straight out of the Boris Johnson playbook. But an odd line of defence. The News Feed was changed in 2018 to specifically prioritise posts from friends and families over bonafide news sources. This had the unintended consequence of prioritising conspiracy theories and fake news posted by friends, whilst downgrading bonafide news stories from reputable media outlets.

This benefitted someone like Ben Shapiro and his small team who take credible stories and rewrite them with an enraging, right-wing biased headline, turning Shapiro into one of the most widely shared "news sources" on Facebook. Meanwhile, the original journalists that wrote the new stories get a fraction of the traction for exactly the same story.

Clegg also promised that Instagram is to build-in new guardrails for younger users (this comes after the whistleblower told the Senate hearing that Facebook put profits ahead of safety for its users.)

This includes a new feature called a "nudge". The idea is that if a user, say a teenage girl with suicidal thoughts or an eating disorder, is spending lots of time on pages that are making matters worse, Instagram will give them a nudge to look at something else, like kittens or puppies.

It beggars belief that this really is the best that Facebook can come up with after $13 billion of R&D!

IMHO this was a weak response from Facebook. There is only one person who should be explaining what Facebook is going to do and that's Mark Zuckerberg. To handle this like a PR exercise with a second-rate politician batting away the questions is not going to cut it.

Clegg did his best. I've always liked him, he seems a decent human being. But this wasn't good enough.

For more on Facebook's trials and tribulations, read this issue of Wiser!

Facebook’s tobacco moment in the toughest of all weeks for Mark Zuckerberg
It’s hard to imagine a tougher week for Mark Zuckerberg and Facebook. The whistleblower talked to Congress, painting a damning picture, putting profits before safety. To top it off, Facebook scored an own goal, taking the entire network offline for over 5 hours!

Or watch Nick Clegg being interviewed by CNN's Dana Bash

Wiser! YouTube Channel

A weird thing happened to the Wiser! YouTube channel last weekend. After 6 months of viewing figures bumping along the bottom for the YouTube videos that accompany most issues of Wiser!, one of them suddenly took off.

To be fair, it was the most-watched video on the channel (about China's cashless society, including my chat with Richard Turrin about China's CBDC plans), but something had clearly triggered the YouTube algorithms to get behind the video.

The video had been viewed only 800 times in the first 3 months and 20,000 times in the last week! YouTube has pushed the video onto a viewer's recommendation feed over 250,000 times in the last week.

I'm still trying to figure it out whilst I enjoy the viral ride. In the meantime, this is the latest video about Amazon's strategy to own the tech in your home.

Snippets of Insight and Information


Apple cuts iPhone production due to chip shortage

Apple shares tumbled this week after Bloomberg reported that production volumes of the iPhone 13 would be cut by 10 million due to global computer chip shortages. Source: ZDnet

How AT&T helped build far-right One America News

Reuters has reported that the American telecom giant nurtured the news channel that is at the centre of a bitter national divide over politics and truth in the USA. It's an excellent piece of investigative journalism. Source: Reuters

Could Bitcoin reach an all-time high?

The price for one of the 18.8 million Bitcoins in circulation continues to head north, predominantly fueled by institutional capital buying more than it's selling on the spot market. At the time of writing, the price of BTC was around $58k (it was $32k 3 months ago).

Tesla delays rollout of self-driving software

CEO Elon Musk cited “last-minute concerns” as the reason for Tesla's delay in rolling out a “Full Self-Driving” update to owners. The software was supposed to roll out first to about 1,000 Tesla owners with perfect safety scores of 100,  as determined by the carmaker, with a gradual rollout for those with scores at 99 and below after that. Source: The Verge

Amazon's about-turn on plans to make workers return to the office

Working from home has given employees a new perspective on work/life balance and the reality is that a large proportion of workers are just not going to go back to full-time office work. Amazon is the latest firm to realise the new reality and have softened their approach to Working From Home.  Source: GeekWire

Coinbase joins the NFT party

Coinbase is launching a marketplace for NFTs, unimaginative called Coinbase NFT. Users will be able to buy, sell, and mint NFTs, or tokens that verify you’re the owner of a digital asset. Coinbase also said it would include “social features” and pitched the platform as more user-friendly than "the other guys". Source: Morning Brew

James T Kirk finally makes it into space

When the world's richest man has a midlife crisis, what else would you expect him to do than to build a space rocket shaped like a male appendage and then put Captain Kirk in it.

And that's precisely what happened earlier this week when William Shatner, aka James T Kirk of the Starship Enterprise, became the oldest human being to go to space on the 2nd manned mission from Jeff Bezos' Blue Origin.

Shatner is 90 years old and described his 10-minute flight to the edge of the Earth's atmosphere as a "profound experience".

The Space Race between the 2 richest men in the world

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