After a tax crackdown, Apple found a new shelter for its profits

The New York Times reports: Tim Cook was angry.

It was May 2013, and Mr. Cook, the chief executive of Apple, appeared before a United States Senate investigative subcommittee. After a lengthy inquiry, it found that the company had avoided tens of billions of dollars in taxes by shifting profits into Irish subsidiaries that the panel’s chairman called “ghost companies.”

“We pay all the taxes we owe, every single dollar,” Mr. Cook declared at the hearing. “We don’t depend on tax gimmicks,” he went on. “We don’t stash money on some Caribbean island.”

True enough. The island Apple would soon rely on was in the English Channel.

Five months after Mr. Cook’s testimony, Irish officials began to crack down on the tax structure Apple had exploited. So the iPhone maker went hunting for another place to park its profits, newly leaked records show. With help from law firms that specialize in offshore tax shelters, the company canvassed multiple jurisdictions before settling on the small island of Jersey, which typically does not tax corporate income.

Apple has accumulated more than $128 billion in profits offshore, and probably much more, that is untaxed by the United States and hardly touched by any other country. Nearly all of that was generated over the past decade.

The previously undisclosed story of Apple’s search for a new island tax haven and its use of Jersey is among the revelations emerging from a cache of secret corporate records from Appleby, a Bermuda-based law firm that caters to businesses and the wealthy elite. [Continue reading…]

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Paradise Papers leak reveals secrets of the world elite’s hidden wealth

The Guardian reports: The world’s biggest businesses, heads of state and global figures in politics, entertainment and sport who have sheltered their wealth in secretive tax havens are being revealed this week in a major new investigation into Britain’s offshore empires.

The details come from a leak of 13.4m files that expose the global environments in which tax abuses can thrive – and the complex and seemingly artificial ways the wealthiest corporations can legally protect their wealth.

The material, which has come from two offshore service providers and the company registries of 19 tax havens, was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with partners including the Guardian, the BBC and the New York Times.

The project has been called the Paradise Papers. It reveals:

[Continue reading…]

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Senators demand online ad disclosures as tech lobby mobilizes

The New York Times reports: Senator John McCain and two Democratic senators moved on Thursday to force Facebook, Google and other internet companies to disclose who is purchasing online political advertising, after revelations that Russian-linked operatives bought deceptive ads in the run-up to the 2016 election with no disclosure required.

But the tech industry, which has worked to thwart previous efforts to mandate such disclosure, is mobilizing an army of lobbyists and lawyers — including a senior adviser to Hillary Clinton’s campaign — to help shape proposed regulations. Long before the 2016 election, the adviser, Marc E. Elias, helped Facebook and Google request exemptions from the Federal Election Commission to existing disclosure rules, arguing that ads on the respective platforms were too small to fit disclaimers listing their sponsors.

Now Mr. Elias’s high-powered Democratic election law firm, Perkins Coie, is helping the companies navigate legal and regulatory issues arising from scrutiny of the Russian-linked ads, which critics say might have been flagged by the disclaimers. In a two-front war, tech companies are targeting an election commission rule-making process that was restarted last month and a legislative effort in the Senate.

“I’m not going to tell you they support this bill right now,” said Senator Amy Klobuchar, Democrat of Minnesota and the lead author of the proposed Honest Ads Act.

But she and her co-author, Senator Mark Warner, Democrat of Virginia, urged the social media firms to take greater responsibility for the content that lands on their sites, including political ads and other content meant to sow discord or chaos. With Facebook and Google alone capturing an estimated 85 percent of all digital political ads, self-policing won’t cut it, they said. [Continue reading…]

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‘Our minds can be hijacked’: the tech insiders who fear a smartphone dystopia

Paul Lewis writes: Justin Rosenstein had tweaked his laptop’s operating system to block Reddit, banned himself from Snapchat, which he compares to heroin, and imposed limits on his use of Facebook. But even that wasn’t enough. In August, the 34-year-old tech executive took a more radical step to restrict his use of social media and other addictive technologies.

Rosenstein purchased a new iPhone and instructed his assistant to set up a parental-control feature to prevent him from downloading any apps.

He was particularly aware of the allure of Facebook “likes”, which he describes as “bright dings of pseudo-pleasure” that can be as hollow as they are seductive. And Rosenstein should know: he was the Facebook engineer who created the “like” button in the first place.

A decade after he stayed up all night coding a prototype of what was then called an “awesome” button, Rosenstein belongs to a small but growing band of Silicon Valley heretics who complain about the rise of the so-called “attention economy”: an internet shaped around the demands of an advertising economy.

These refuseniks are rarely founders or chief executives, who have little incentive to deviate from the mantra that their companies are making the world a better place. Instead, they tend to have worked a rung or two down the corporate ladder: designers, engineers and product managers who, like Rosenstein, several years ago put in place the building blocks of a digital world from which they are now trying to disentangle themselves. “It is very common,” Rosenstein says, “for humans to develop things with the best of intentions and for them to have unintended, negative consequences.” [Continue reading…]

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Senator berates Twitter over ‘inadequate’ inquiry into Russian meddling

The New York Times reports: A key senator investigating Russia’s interference in the 2016 election sharply criticized Twitter on Thursday for failing to aggressively investigate the Russian misuse of its platform after the company said it had largely limited its own inquiry to accounts linked to fraudulent profiles already identified by Facebook.

The senator, Mark Warner, Democrat of Virginia and vice chairman of the Senate Intelligence Committee, called Twitter’s briefing for congressional investigators “very disappointing,” and accused company officials of ignoring extensive evidence of nefarious Russian activity.

The company’s presentation “showed an enormous lack of understanding from the Twitter team of how serious this issue is, the threat it poses to democratic institutions and again begs many more questions than they offered,” Mr. Warner said, adding, “Their response was frankly inadequate on every level.” [Continue reading…]

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Google is coming after critics in academia and journalism. It’s time to stop them

Zephyr Teachout writes: About 10 years ago, Tim Wu, the Columbia Law professor who coined the term network neutrality, made this prescient comment: “To love Google, you have to be a little bit of a monarchist, you have to have faith in the way people traditionally felt about the king.”

Wu was right. And now, Google has established a pattern of lobbying and threatening to acquire power. It has reached a dangerous point common to many monarchs: The moment where it no longer wants to allow dissent.

This summer, a small team of well-respected researchers and journalists, the Open Markets team at the New America think tank (where I have been a fellow since 2014), dared to speak up about Google, in the mildest way. When the European Union fined Google for preferring its own subsidiary companies to its rival companies in search results, it was natural that Open Markets, a group dedicated to studying and exposing distortions in markets, including monopoly power, would comment. The researchers put out a 150-word statement praising the E.U.’s actions. They wrote, “By requiring that Google give equal treatment to rival services instead of privileging its own, [the E.U.] is protecting the free flow of information and commerce upon which all democracies depend.” They called upon the Federal Trade Commission and Department of Justice and state attorneys general to apply the traditional American monopoly law, which would require separate ownership of products and services and the networks that sell products and services.

Google has been funding New America for years at high levels. Within 24 hours of the statement going live, Google representatives called New America’s leadership expressing their displeasure. Two planned hires for the Open Markets team suddenly were canceled. Three days later, the head of the Open Markets team, the accomplished journalist Barry C. Lynn, received a letter from the head of the think tank, demanding that the entire team leave New America. The reason? The statement praising the E.U.’s decision against Google was, according to New America President Anne-Marie Slaughter, “imperiling the institution.” (As of this writing, Slaughter has denounced the story as false, claiming that Lynn was dismissed for failures of “openness” and “collegiality.”) [Continue reading…]

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Facebook’s offensive ad targeting options go far beyond ‘Jew haters’

Slate reports: ProPublica reported Thursday that it was able to use Facebook’s advertising platform to target users who had expressed interest in topics such as “Jew hater” and “German Schutzstaffel,” also known as the Nazi SS. And when ProPublica’s reporters were in the process of typing “Jew hater,” Facebook’s ad-targeting tool went so far as to recommend related topics such as “how to burn Jews” and “History of ‘why Jews ruin the world.’”

To make sure the categories were real, ProPublica tried to purchase three ads, or “promoted posts,” targeting those users. Facebook’s targeting tool initially wouldn’t place the ads—not because of anything wrong with the categories, but simply because the number of Facebook users interested in them was beneath its preprogrammed threshold. When ProPublica added a larger category to “Jew hater” and the others, however, Facebook’s ad tool reported that its audience selection was “great!” Within 15 minutes, the company’s ad system had approved all three ads.

Contacted about the anti-Semitic ad categories by ProPublica, Facebook removed them, explaining that they had been generated algorithmically. The company added that it would explore ways to prevent similarly offensive ad targeting categories from appearing in the future.

Yet when Slate tried something similar Thursday, our ad targeting “Kill Muslimic Radicals,” “Ku-Klux-Klan,” and more than a dozen other plainly hateful groups was similarly approved. In our case, it took Facebook’s system just one minute to give the green light. [Continue reading…]

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Facebook enabled advertisers to reach ‘Jew haters’

ProPublica reports: Want to market Nazi memorabilia, or recruit marchers for a far-right rally? Facebook’s self-service ad-buying platform had the right audience for you.

Until this week, when we asked Facebook about it, the world’s largest social network enabled advertisers to direct their pitches to the news feeds of almost 2,300 people who expressed interest in the topics of “Jew hater,” “How to burn jews,” or, “History of ‘why jews ruin the world.’”

To test if these ad categories were real, we paid $30 to target those groups with three “promoted posts” — in which a ProPublica article or post was displayed in their news feeds. Facebook approved all three ads within 15 minutes.

After we contacted Facebook, it removed the anti-Semitic categories — which were created by an algorithm rather than by people — and said it would explore ways to fix the problem, such as limiting the number of categories available or scrutinizing them before they are displayed to buyers.

“There are times where content is surfaced on our platform that violates our standards,” said Rob Leathern, product management director at Facebook. “In this case, we’ve removed the associated targeting fields in question. We know we have more work to do, so we’re also building new guardrails in our product and review processes to prevent other issues like this from happening in the future.”

Facebook’s advertising has become a focus of national attention since it disclosed last week that it had discovered $100,000 worth of ads placed during the 2016 presidential election season by “inauthentic” accounts that appeared to be affiliated with Russia. [Continue reading…]

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Google ‘segregates’ women into lower-paying jobs, stifling careers, lawsuit says

The Guardian reports: Google systematically pays women less than men doing similar work, according to a class action-lawsuit accusing the technology company of denying promotions and career opportunities to qualified women who are “segregated” into lower-paying jobs.

The complaint, filed Thursday on behalf of all women employed by Google in California over the last four years, provided the most detailed formal accounts to date of gender discrimination and pay disparities at the company after months of criticisms and a growing chorus of women publicly speaking out.

“We’ve been talking about these issues for a long time, and it hasn’t really changed,” Kelly Ellis, a former Google employee and a lead plaintiff on the case, told the Guardian in her first interview about the suit. “There’s been a lot of PR and lip service, but … this is going to be one of the only ways to get these companies to change how they hire and compensate women.” [Continue reading…]

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The bad new politics of big tech

Ben Smith writes: The blinding rise of Donald Trump over the past year has masked another major trend in American politics: the palpable, and perhaps permanent, turn against the tech industry. The new corporate leviathans that used to be seen as bright new avatars of American innovation are increasingly portrayed as sinister new centers of unaccountable power, a transformation likely to have major consequences for the industry and for American politics.

That turn has accelerated in recent days: Steve Bannon and Bernie Sanders both want big tech treated as, in Bannon’s words in Hong Kong this week, “public utilities.” Tucker Carlson and Franklin Foer have found common ground. Even the group No Labels, an exquisitely poll-tested effort to create a safe new center, is on board. Rupert Murdoch, never shy to use his media power to advance his commercial interests, is hard at work.

“Anti-trust is back, baby,” Yelp’s policy chief, Luther Lowe, DM’d me after Fox News gave him several minutes to make the antitrust case against Yelp’s giant rival Google to its audience of millions. [Continue reading…]

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How Silicon Valley is erasing your individuality

Franklin Foer writes: Until recently, it was easy to define our most widely known corporations. Any third-grader could describe their essence. Exxon sells gas; McDonald’s makes hamburgers; Walmart is a place to buy stuff. This is no longer so. Today’s ascendant monopolies aspire to encompass all of existence. Google derives from googol, a number (1 followed by 100 zeros) that mathematicians use as shorthand for unimaginably large quantities. Larry Page and Sergey Brin founded Google with the mission of organizing all knowledge, but that proved too narrow. They now aim to build driverless cars, manufacture phones and conquer death. Amazon, which once called itself “the everything store,” now produces television shows, owns Whole Foods and powers the cloud. The architect of this firm, Jeff Bezos, even owns this newspaper.

Along with Facebook, Microsoft and Apple, these companies are in a race to become our “personal assistant.” They want to wake us in the morning, have their artificial intelligence software guide us through our days and never quite leave our sides. They aspire to become the repository for precious and private items, our calendars and contacts, our photos and documents. They intend for us to turn unthinkingly to them for information and entertainment while they catalogue our intentions and aversions. Google Glass and the Apple Watch prefigure the day when these companies implant their artificial intelligence in our bodies. Brin has mused, “Perhaps in the future, we can attach a little version of Google that you just plug into your brain.”

More than any previous coterie of corporations, the tech monopolies aspire to mold humanity into their desired image of it. They think they have the opportunity to complete the long merger between man and machine — to redirect the trajectory of human evolution. [Continue reading…]

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Facebook, Google and Amazon wield power over us all, and everyone should be worried

Scott Cleland writes: The economic and social problems caused by the exceptional unchecked power of three companies — Google, Amazon, and Facebook — has created a rare bipartisan opportunity for the right and left to come together around common interests: holding abuses of unaccountable power accountable.

As both conservatives and progressives have learned through experience, these hyper-concentrated market and political powers can effectively censor, exclude, or ban people or entities at any time, for any reason — and without any explanation, due process, or real recourse.

Conservatives understand how unchecked online hyper-power can threaten individual liberty with tyranny: Facebook wields its social power to censor news and filter unacceptable opinions; Google denies advertising to conservatives with which it disagrees; and Amazon ignores pirated goods sold on its marketplace to force the rightful owner of the product to distribute its goods on Amazon on Amazon’s terms, to protect its brand, property, and business.

Progressives understand how automated autocracy can threaten participatory democracy: Google recently threatened the New America Foundation’s funding to force it to fire Barry Lynn and its anti-monopoly researchers for supporting the EU’s $3 billion fine against Google; Facebook and Google have sparked widespread outrage as the prime purveyors of selling highly profitable fake news in last year’s election cycle; and Amazon is seen unfairly undermining competition, and threatening jobs and communities. [Continue reading…]

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How hate groups forced online platforms to reveal their true nature

John Herman writes: The recent rise of all-encompassing internet platforms promised something unprecedented and invigorating: venues that unite all manner of actors — politicians, media, lobbyists, citizens, experts, corporations — under one roof. These companies promised something that no previous vision of the public sphere could offer: real, billion-strong mass participation; a means for affinity groups to find one another and mobilize, gain visibility and influence. This felt and functioned like freedom, but it was always a commercial simulation. This contradiction is foundational to what these internet companies are. Nowhere was this tension more evident than in the case of Cloudflare, a web-infrastructure company. Under sustained pressure to drop The Daily Stormer as a client, the company’s chief executive, Matthew Prince, eventually assented. It was an arbitrary decision, and one that was out of step with the company’s stated policies. This troubled Prince. ‘‘I woke up in a bad mood and decided someone shouldn’t be allowed on the internet,’’ he wrote in an email to his staff. ‘‘No one should have that power.’’

Social platforms tend to refer to their customers in euphemistic, almost democratic terms: as ‘‘users’’ or ‘‘members of a community.’’ Their leaders are prone to statesmanlike posturing, and some, like Mark Zuckerberg, even seem to have statesmanlike ambitions. Content moderation and behavioral guidelines are likewise rendered in the terms of legal governance, as are their systems for dispute and recourse (as in the ubiquitous post-ban ‘‘appeal’’). Questions about how platforms like Twitter and Reddit deal with disruptive users and offensive content tend to be met with defensive language invoking free speech.

In the process of building private communities, these companies had put on the costumes of liberal democracies. They borrowed the language of rights to legitimize arbitrary rules, creating what the technology lawyer Kendra Albert calls ‘‘legal talismans.’’ This was first and foremost operationally convenient or even necessary: What better way to avoid liability and responsibility for how customers use your product? It was also good marketing. It’s easier to entrust increasingly large portions of your private and public life to an advertising and data-mining firm if you’re led to believe it’s something more. But as major internet platforms have grown to compose a greater share of the public sphere, playing host to consequential political organization — not to mention media — their internal contradictions have become harder to ignore. Far before Charlottesville, they had already become acute. [Continue reading…]

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Anita Hill: Class actions could fight discrimination in Silicon Valley

Anita Hill writes: The recent leak of a Google engineer’s screed against the company’s diversity initiatives is a reminder that the notion of Silicon Valley as the seat of human progress is a myth — at least when it comes to the way the women behind the latest in technology are treated.

The tech industry is stuck in the past, more closely resembling “Mad Men”-era Madison Avenue or 1980s Wall Street than a modern egalitarian society. It may take the force of our legal system to change that.

The leaked memo, titled “Google’s Ideological Echo Chamber,” called on the company to abandon its efforts for gender diversity and replace them with a focus on “ideological diversity.” The author even claimed that biological differences make women poorly suited to engineering. While the document may be unusual in its explicit embrace of this kind of backward thinking, the attitudes that underlie it are nothing new in Silicon Valley. Google’s decision to fire the employee responsible for the memo neither dispels the notion that a systemic problem exists nor solves it. [Continue reading…]

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When Silicon Valley took over journalism

Franklin Foer writes: Over the past generation, journalism has been slowly swallowed. The ascendant media companies of our era don’t think of themselves as heirs to a great ink-stained tradition. Some like to compare themselves to technology firms. This redefinition isn’t just a bit of fashionable branding. As Silicon Valley has infiltrated the profession, journalism has come to unhealthily depend on the big tech companies, which now supply journalism with an enormous percentage of its audience—and, therefore, a big chunk of its revenue.

Dependence generates desperation—a mad, shameless chase to gain clicks through Facebook, a relentless effort to game Google’s algorithms. It leads media outlets to sign terrible deals that look like self-preserving necessities: granting Facebook the right to sell their advertising, or giving Google permission to publish articles directly on its fast-loading server. In the end, such arrangements simply allow Facebook and Google to hold these companies ever tighter.

What makes these deals so terrible is the capriciousness of the tech companies. Quickly moving in a radically different direction may be great for their bottom line, but it is detrimental to the media companies that rely on the platforms. Facebook will decide that its users prefer video to words, or ideologically pleasing propaganda to more-objective accounts of events—and so it will de-emphasize the written word or hard news in its users’ feeds. When it makes shifts like this, or when Google tweaks its algorithm, the web traffic flowing to a given media outlet may plummet, with rippling revenue ramifications. The problem isn’t just financial vulnerability, however. It’s also the way tech companies dictate the patterns of work; the way their influence can affect the ethos of an entire profession, lowering standards of quality and eroding ethical protections. [Continue reading…]

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Putin’s hackers now under attack — from Microsoft

The Daily Beast reports: A new offensive by Microsoft has been making inroads against the Russian government hackers behind last year’s election meddling, identifying over 120 new targets of the Kremlin’s cyber spying, and control-alt-deleting segments of Putin’s hacking apparatus.

How are they doing it? It turns out Microsoft has something even more formidable than Moscow’s malware: Lawyers.

Last year attorneys for the software maker quietly sued the hacker group known as Fancy Bear in a federal court outside Washington DC, accusing it of computer intrusion, cybersquatting, and infringing on Microsoft’s trademarks. The action, though, is not about dragging the hackers into court. The lawsuit is a tool for Microsoft to target what it calls “the most vulnerable point” in Fancy Bear’s espionage operations: the command-and-control servers the hackers use to covertly direct malware on victim computers. These servers can be thought of as the spymasters in Russia’s cyber espionage, waiting patiently for contact from their malware agents in the field, then issuing encrypted instructions and accepting stolen documents. [Continue reading…]

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Can the tech giants be stopped?

Jonathan Taplin writes: I would date the rise of the digital monopolies to August 2004, when Google raised $1.9 billion in its initial public offering. By the end of that year, Google’s share of the search-engine market was just 35%; Yahoo ’s was 32%, and MSN’s was 16%. Today, under Alphabet, Google’s market share is 87% in the U.S. and 91% in Europe. In 2004, Amazon had net sales revenue of $6.9 billion. In 2016, its net sales revenue was nearly $136 billion, and it now controls 65% of all online new book sales, whether print or digital. In mobile social networks, Facebook and its subsidiaries (Instagram, WhatsApp and Messenger) control 75% of the American market.

This shift has brought about a massive reallocation of revenue, with economic value moving from the creators of content to the owners of monopoly platforms. Since 2000, revenues for recorded music in the U.S. have fallen from almost $20 billion a year to less than $8 billion, according to the Recording Industry Association of America. U.S. newspaper ad revenue fell from $65.8 billion in 2000 to $23.6 billion in 2013 (the last year for which data are available). Though book publishing revenues have remained flat, this is mostly because increased children’s book sales have made up for the declining return on adult titles.

From 2003 to 2016, Google’s revenue grew from about $1.5 billion to some $90 billion as Alphabet. Today, it is the largest media company in the world, collecting $79.4 billion in ad revenue in 2016, according to Zenith. Facebook is a distant second, with $26.9 billion.

The precipitous decline in revenue for content creators has nothing to do with changing consumer preferences for their content. People are not reading less news, listening to less music, reading fewer books or watching fewer movies and TV shows. The massive growth in revenue for the digital monopolies has resulted in the massive loss of revenue for the creators of content. The two are inextricably linked. [Continue reading…]

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