Minnesota senator and presidential candidate Amy Klobuchar has floated the idea of taxing tech companies when they exploit user data. Platforms like Facebook “use us, and we’re their commodity, and we’re not getting anything out of it,” Klobuchar said today during a SXSW interview with Recode co-founder Kara Swisher. “When they sell our data to someone else, well, maybe they’re going to have to tell us so we can put some kind of a tax on it.”
Klobuchar acknowledged that she was simply floating an option, not putting forward a detailed policy prescription. And the idea isn’t nearly as mainstream as passing privacy legislation or toughening antitrust policies, two areas Klobuchar also emphasized — saying she wanted to scrutinize whether companies like Facebook, Amazon, and Google had suppressed competition. But she said a major problem with the tech landscape was that “we just thought ‘Oh, we can just put our stuff on there and it’s fine,’ and they’re making money off of us.”
She compared tech companies using consumer data to transportation companies using public infrastructure. “If you go on a truck, if you send stuff on rail, you have to pay for the roads and you have to pay for the rail. And maybe there’s some way we can do that with large sets of data, when [tech companies] use it or when they sell it,” she said. “Because otherwise, we’re just being used, right?”
Turning this idea into actual policy would be complicated — it would require determining what counts as taxable consumer data, what kind of data sharing should incur a tax, and which companies would be required to pay it. Klobuchar said she didn’t want to inhibit innovation, and she suggested that the rule might only apply to “larger platforms, not startups.”
In Europe last year, regulators proposed a tax on any company making money from advertising or selling user data within a country, regardless of whether they have a brick-and-mortar presence. However, some EU member states criticized the plan, and it was abandoned in favor of a more limited proposal from France and Germany. In the US, Klobuchar is the first major 2020 presidential candidate to propose a similar tax.
But several candidates have run on the promise to rein in a handful of large tech platforms. Yesterday, Klobuchar’s competitor Elizabeth Warren revealed a plan to designate some companies as highly regulated “platform utilities,” and to roll back mergers like Amazon’s purchase of Whole Foods and Facebook’s acquisition of WhatsApp and Instagram. Klobuchar was generally more circumspect in her interview, but a data tax would be a dramatic proposal — if she actually moves forward with it, which seems far from certain.
Comments
They’re supposed to pay tax anyway, why not just close tax loopholes and make them pay what they should rather than what they can get away with paying
By Ponk on 03.09.19 4:28pm
All the corporate accountants and tax attorneys would just learn to code, right?
By marshallbanana on 03.12.19 10:43am
This is all well and good, until you realize how people are benefiting is through their 401k, and when you start harming these companies bottom line, you’re also harming shareholders.
By Smartyflix on 03.09.19 4:55pm
Won’t somebody think of the shareholders!
By zduboss on 03.09.19 7:10pm
Do you have a 401k or an IRA? If you do, you might be a shareholder in one of these companies.
By daxus on 03.10.19 6:20pm
Or have a pension that invests in these companies. Most pensions do.
By low_tech on 03.11.19 8:31am
Pension? What’s that?
By marshallbanana on 03.12.19 10:45am
"…we’re their commodity, and we’re not getting anything out of it."
This is patently false. To the senator’s point of view, the government may not be collecting taxes off of these exchanges, but they are voluntary exchanges between two parties all the same. There is zero justification for this.
The typical voluntary exchange here is some sort of service (e.g., Gmail) is exchange for collecting and selling user data. That’s how these companies stay in business; they cannot offer the service with no upfront monetary cost without bringing in money somewhere else.
If the senator cares about fair taxation in the marketplace, she should call for an immediate cessation of all forms of governmental corporatism and have the tax code apply fairly to all businesses.
By Bobicus on 03.09.19 4:56pm
thank you.
By llort on 03.09.19 5:06pm
THIS SERVICE IS NOT FREE. IN EXCHANGE TO USE THIS SERVICE PROVIDER OF THE SERVICE HAS RIGHT TO ACCESS, STORE AND SELL TO ANY THIRD PARTY ALL OF YOUR PRIVATE DATA AND CONTENT COLLECTED THROUGH YOUR USE OF THIS SERVICE.
If this was the label on Gmail login page header done in bold, red, 25 pixel font how many users do you think Gmail will loose the first day? 99% of the people have no clue that Gmail goes through your personal emails and it’s content in order to make money.
By Texax on 03.10.19 5:56am
Well the problem with your notice is it’s false. Google isn’t selling your information. They’re targeting ads to it. Your statement implies they’re allowing companies to see your emails.
By My Only Name Change on 03.10.19 11:57am
The difference between selling the contents of emails, selling a consumer profile based on the contents of emails, and selling targeted ads based on consumer profiles derived from the contents of emails is really only a matter of degree. They’re not categorically different. Google is just aggregating several services that companies interested in personal/consumer data would buy anyway.
By marshallbanana on 03.12.19 10:49am
But they’re not selling a consumer profile either. They are allowing companies to target ads to a group of people that meet certain characteristics. They’re not giving away your name or a packaged profile.
Car Ad
Target buyers within (age group), (income), (market area).
Companies placing ads don’t want the damn profile they want Google to deliver the ad to the right people. It’s not nearly as voyeuristic as people are making it out to be.
By My Only Name Change on 03.12.19 12:02pm
A group of people that meet certain characteristics is a consumer profile.
By marshallbanana on 03.12.19 12:16pm
The main point being is there a major difference between paying Google to deliver a message and Google selling specific information about a particular customer to a company.
Google is delivering an ad to a demographic. They are not selling information about customers. They are not identifying individuals to marketers. They are not telling marketers anything about the contents of a users inbox. There is nothing remotely close about what Google is doing to what OP originally implied.
By My Only Name Change on 03.12.19 4:39pm
I know that. We both understand the same basic facts but interpret them differently. Marketers are not interested in information on individuals, they want information at scale. But information at scale begins with information on individuals. Google is using information on individuals to build information at scale, then selling it at scale where it can then be used to deliver messages to individuals. We’re splitting hairs. But when someone says "they sell your data," they’re not wrong. Yes, it is more technically correct to say "they sell data that includes data points derived from your data and aggregated with thousands/millions of other individuals’ data." But they’re still selling your data.
Think of it this way. Imagine a conscious mother hen whose offspring is ground into chicken nuggets. To Purdue or Tyson or whoever, they’re not selling the hen’s child, they’re selling the aggregate of thousands of individual livestock animals. But to the hen, they’re still selling her child. Neither is wrong.
By marshallbanana on 03.13.19 9:22am
Clearly you have no clue how Gmail actually works either…
By shabanga on 03.10.19 3:02pm
That notice was provided to you in the form of the terms of service agreement you signed when you created your account, and it’s likely directly re-provided to you at least once a year. You have no one to blame but yourself if you didn’t read it.
By daxus on 03.10.19 6:23pm
I dunno. I’d place a modicum of blame on the lawyers who wrote them and the developer that displayed them in all-caps.
By marshallbanana on 03.12.19 10:55am
A data tax similar to an emissions tax. A specific amount per amount of data taken per customer a company has. Consumer data is a much bigger commodity than almost anything right now.
By Tratia895 on 03.09.19 9:54pm
Easy to say. But companies will always find a way to get around it.
By skylake on 03.10.19 7:17am
Is she suggesting that these companies are not reporting this revenue already and paying the legally required taxes? They are publicly traded companies. They are already being taxed on the profits from these transactions.
By Arturo_B on 03.10.19 10:18am
What? You’re not getting anything out of it? You’re not using it as a platform to connect with people both personally and professionally and paying no actual money for the ability to do so?
Give me a break! Using social media is a choice and nobody would do it if they weren’t "getting something out of it". We can talk all day about how they should be more transparent but to argue that they are getting something for nothing is downright ridiculous. The sheer stupidity of that comment informs me enough about her to know I won’t even give her a second thought come primary day (if she makes it that long).
By shabanga on 03.10.19 3:05pm
Nevermind taxing. How about I get my cut
By Darthdearth on 03.10.19 4:46pm
That’s very obviously not true. In exchange for providing information that Facebook can use for targeted advertisements, you get to use Facebook.
That’s already taxed. Sales are taxed and corporate profits are taxed.
She clearly has a very poor understanding of what she’s trying to tax, but she wants to tax it anyway.
By daxus on 03.10.19 6:28pm