Digitrade Digest#16

Facebook faces two antitrust inquiries; AntI-China trade bill is pro big tech; UK to join CPTPP

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Trade

Anti-China Trade Bill is big boost for Big Tech

The Intercept: A group of consumer and labor rights organizations warned lawmakers, however, the language in the trade bill could have severe consequences for the global movement to defend user privacy rights, employment protections, and, ironically, competitive markets. A dozen organizations — including Color of Change, Decode Democracy, Jobs with Justice, and Public Citizen — sent Senate Democrats a letter Thursday, after Schumer and Crapo’s deal, urging them to abandon the censorship report plan. The letter also opposed two other Big Tech-friendly provisions that Wyden and Schumer authored, both of which were ultimately left out of the final text.

“This amendment would require the Office of the U.S. Trade Representative (USTR) to become an agent of Big Tech, continually monitoring other nations’ existing and proposed digital governance policies to undermine important pro-consumer, pro-worker, pro-privacy, pro-competitive and pro-fair-business-practices policies and proposals,” wrote the coalition. A copy of the letter was reviewed by The Intercept.

Wyden’s office dismissed concerns about his amendment as the Schumer-Crapo conflict dragged on, and the likelihood of other trade-related regulations even finding their way into the China bill seemed in doubt.

WhatsApp pushing privacy policy before data law comes: Centre to Delhi HC

TheIndianExpress: In its affidavit, the Centre told the court that WhatsApp has “unleashed its digital prowess” to its “unsuspecting existing users” and would like to force them to accept the privacy policy by sending such notifications at regular intervals. “The game plan is very clear — to transfer the entire existing user base committed to updated 2021 privacy policy before the Personal Data Protection (PDP) Bill becomes law,” the government stated in its reply.

Seeking directions from the court to stop WhatsApp from sending such notifications to users, the Centre also argued that WhatsApp’s actions are against “the very grain of prima facie opinion of the Competition Commission of India’s order”, dated March 24.

Big Tech

Facebook is facing two antitrust inquiries in Europe

NewYorkTimes: The investigations by the European Commission, the executive arm of the 27-nation bloc, and Britain’s Competition and Markets Authority, take aim at a key business strategy used by Facebook and other large tech companies: to use their size and power in one area to enter others. Amazon took its position as the largest online retailer to become a major player in video streaming. Apple leveraged the iPhone to be one of the world’s largest mobile payments with Apple Pay. Google parlayed its dominance as a search engine into many different areas.

The regulators said they would start formal investigations of Facebook Marketplace, an eBay-like service introduced in 2016 for users to buy and sell products. Under scrutiny is whether Facebook’s cross-promotion of Marketplace to the more than two billion users of its main social network gave the company an unfair advantage over rivals in violation of European Union competition laws.

UK

U.K. to Begin Process to Join Trans-Pacific Trade Partnership

Bloomberg: “The commencement of an accession process with the United Kingdom and the potential expansion of the CPTPP will send a strong signal to our trading partners around the world of our commitment to support a free, fair, open, effective, inclusive and rules-based trading system,” the ministers said in a joint statement.

While the grouping was at one point seen as a way for the U.S. and Japan to counter the growing economic might of China, former President Donald Trump withdrew from negotiations when he took office in 2017 and his successor Joe Biden hasn’t indicated any reversal is likely.

“CPTPP membership is a huge opportunity for Britain,” U.K. International Trade Secretary Liz Truss said in a statement. “It will help shift our economic centre of gravity away from Europe towards faster-growing parts of the world, and deepen our access to massive consumer markets in the Asia Pacific.”

North America

U.S. to Levy Tariffs Over Digital-Service Tax, but Suspend Implementation

The Wall Street Journal: The digital-services taxes affect companies such as Alphabet Inc. ’s Google and Facebook Inc., and have been a flashpoint in the fight over which countries should have taxing rights over the world’s largest companies.

A growing number of countries, many in Europe, implemented such taxes in recent years after expressing frustration at the slow pace of international talks over how to change the global tax system. Those countries have demanded that big tech firms pay more tax in the countries where their clients are located, while the U.S. has resisted changes that would focus only on American tech companies.

In response to the one-off digital taxes, the U.S. had threatened tariffs, beginning with France, raising the risk of a trade war over the issue. But under the Biden administration, there has been progress in multinational talks, and the U.S. has said it would suspend application of its tariffs. The countries that have implemented taxes have said they plan to withdraw them once there is an international deal.

Tech companies have said they support international changes to tax laws, rather than being subject to a patchwork of national taxes.

The U.K. and Austria commended positive momentum in international tax talks. Spain declined to comment, and the other countries didn’t respond to requests for comment.

The proposed U.S. tariffs of 25% would target imports worth nearly $2 billion from the six countries, including imports worth over $800 million from the U.K. and more than $300 million each from Italy and Spain.

Following investigations initiated against 10 countries in June 2020, the USTR under the Trump administration determined in January that the tax policies of the six countries discriminated against U.S. digital companies and that they were “inconsistent” with the principles of international taxation.

Opinion

US-China tech war: why a digital trade deal with Japan and South Korea is key to gaining the upper hand

South China Morning Post: There is an aspect of the US-China technology race that is more consequential than simply mining more data or developing better technology. It is writing the rules of the digital road. In this competition over standards, whichever nation first strikes a trilateral deal with technology leaders Japan and South Korea will secure a strategic chokepoint in the digital architecture of Asia.

Far more so than China, the United States generally prefers an open, integrated global market that promotes unencumbered flows of data. In practice, Washington has established high standards for protecting data, reducing digital services taxes, and enforcing intellectual property rights. Examples include the US-Mexico-Canada Agreement and the US-Japan Digital Trade Agreement. Also significant is Washington’s push for such a framework in its engagement at multilateral forums, such as the World Trade Organization, Asia-Pacific Economic Cooperation and the G7, whose digital ministers recently endorsed digital standards that evoke shared liberal values of open and competitive markets.

For its part, Beijing has developed a national digital strategy to become a “network great power”. Composed of multiple elements – the “Great Firewall”, Digital Silk Road, and Belt and Road Initiative – and synchronised with Beijing’s regularly revised five-year plans, the blueprint is complex in design but straightforward in its objectives: to leverage the country’s immense pool of data, police the flow of foreign information, and boost digital trade. In so doing, Beijing aims to leapfrog the US as a global technology leader and to become a dominant force in shaping digital rules.

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The Digitrade Digest is a weekly publication of the Digital Rights Program at Public Citizen.