US digital monopolies will repay everything

The G-20 (G20) has achieved what may be termed a compromise on taxation of transnational companies. The agreement was signed in Venice on June 10 and caused considerable discussion.

Some commentators were so encouraged that they called what happened almost the beginning of a new era. It would seem that the rules are defined. However, if you perceive everything soberly, you can assume a more interesting development of events.

The governments of most countries agree on the need to take taxes from American-by-birth international companies. But when the “financial leaders” of G20 reached an understanding, this was not a revolution from below (coming from national administrations), but a concession from above — from Western governments, since the corporate system was threatened by an uncoordinated attack from different sides, when the tax, judicial, antitrust and other authorities of a number of states would begin to make their justified claims. And there is no chance to fight them off.

Therefore, G7 descended to the interests of G20 and even a wider range of states, agreeing to 15%. The global minimum corporate profit tax of 15% is the result of the June agreement in Venice. It is declared: though large IT corporations — Apple, Google, Amazon, Facebook and others — are used to paying taxes only at the place of registration, now they will have to pay taxes in the countries where they receive income.

This can be considered a small success of the ruling circles of the United States, since they hope to satisfy the rest of the world. To understand this, you need to answer a simple question: why did such a tax not appear earlier – 10, 15 or even 20 years ago? The answer is clear: American transnational companies were not in danger – it was not necessary to make concessions to other states that behaved less decisively.

The crisis years of 2008-2020 have changed a lot in the world. Among other things – the behavior of the governments of many states. France dared to be the first to file a tax claim with Microsoft. The French division of the company shied away from this unpleasant obligation, transferring the sale of advertising to the Irish office of the corporation. Having committed this “insensitivity” back in 2013 and then demanding 52.5 billion euros from Microsoft, France still did not give rest to American giants at the end of 2020.

In December 2020, the Financial Times reported: Google, Amazon, Facebook, Apple, Uber, Airbnb, Booking and other American firms (about 30 in total) received notifications of the need to pay a new

Was all this nice for American cross-border businesses? Did they feel threatened here? Did they not understand from the French measures and claims that similar measures were extremely dangerous for them? Did they themselves agree to a 15% tax, just to get rid of the greater threat?

And the greater threat is not fantasy. The US has an extremely active foreign policy. It puts many large transnational monopolies in a strange position. Without pressure from the American political elite, they would hardly dare to defy so audaciously, for example, the Russian state – a matter that is completely unreasonable and not painless in commercial terms.

In July, Russian Roskomnadzor (Federal Service for Supervision of Communications, Information Technology, and Mass Media) accused YouTube of ignoring the demand to remove fakes, including many political provocations. Access to the materials of the Russian press by the American resource is limited, unwelcome popular channels are removed. Roskomnadzor emphasizes that YouTube in this matter is a record holder. Total:

“About 30 cases of censorship of Russian publications and information resources have been identified, including Russia Today, Russia 24, NTV, TVC, Vzglyad and other Russian media.”

Roskomnadzor sent Google as the owner of YouTube over 24 thousand demands to remove videos that are considered illegal in Russia. The reaction is known.

What does all this mean? And where will this story lead? Firstly, the American corporation considers itself capable not to reckon with the laws and requirements in Russia. Secondly, the words did not work — while the format of communication was by no means financial, which creates a threat to the YouTube of blocking or filtering materials through the laying resource.

Thirdly, presumably, the company is confident in the inevitable loss of many positions and believes that the remaining time is a valuable resource, and maneuvers will not give anything. Finally, it is clear: YouTube is under the control of the American elite, which actively uses it politically, and politics turns out to be more important than business interests — the owner of the Google resource will cover losses from the loss of Russian and related areas.

Contradictions with Facebook are also accumulating. On July 2, Roskomnadzor warned that it would fine Facebook, Twitter and WhatsApp for refusing to post databases of Russian users in Russia. There are claims about the content of the promoted publications; tax authorities are saving up their portfolio of charges and evidence on them. Microsoft programs for personal computers and partly smartphones can feel relatively calm in Russia (we leave WhatsApp out of the equation). But here the question will be raised about the shares of the market and the audience.

American software dominates the market and even has privileges like Windows. In Russia, retail chains sell computers with a pre-installed OS. The buyer cannot refuse it and does not know that it makes sense: Windows and products under it dominate, and the alternative is not even discussed, although there are free OS, such as Ubuntu.

Structures of power, education and science, including schools, cultural institutions, firms and public organizations — everybody in Russia, with the exception of the military (they have some secrets from the United States), rely on American software. For Microsoft, this is money, and profit. But it’s not just that.

A tax rate of 15%, 25%, even 35% of the profits of American digital corporations in Russia does not abolish the monopoly domination of these companies. This is a kind of payoff that they (so far only 15%) are willing to pay to maintain their almost absolute control over the information space, as well as services — and ultimately largely over those who use them.

Is this acceptable even if the Russian state agrees with the principle and amount of tax determined within the framework of the G20? Undoubtedly it is unacceptable. So, the market will face redistribution of spheres of influence.

There are so many contradictions that you can expect an attack by digital giants in Russia from different directions. Firstly, from the political and censorship points of view, since they do not allow different opinions and press the alternative, acting strictly in the interests of US policy.

Secondly, in terms of the collection of private information relating to personal safety, health and financial protection of citizens; storing this information, selling and transferring it can hardly be prevented by simply storing data on servers in Russia. All of this applies to corporate-controlled and closed software products. Thirdly, antitrust law dictates a policy of separation, when US firms can get a total market share of less than 30% in various areas.

Naturally, this is not a complete list — and not only in Russia such questions will be raised in the coming years. The new tax will not cancel this prospect and will not be a defense against change for multinational companies from the United States. Their essence is fundamental reform, where fair taxation is only a small proportion.

By Vasily Koltashov, Head of the Center for Political Economic Research of the New Society Institute

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