Tax season, indeed.
The regulatory landscape was dotted with news out of Europe centered on the way that tech firms do business — and how they’re taxed.
First, the way they do business. One proposal from the European Commission would shape the ranking of search results. Reuters reported that search results across eCommerce and mobile conduits would, at least as defined in draft legislation, target ostensibly harmful trading practices.
According to the draft, “online intermediation services can hold superior bargaining power over their business users, enabling them to behave unilaterally in a way that is capable of harming the businesses using them.”
Thus, firms, eBay among them, would have to offer up details on how they devise rankings and how they deploy algorithms. The actual mechanics of those formulas would not be disclosed. Changes in terms and conditions would also have to be disclosed to companies affected by those rankings, typically within 15 days.
As for taxes, tech behemoths under scrutiny across a separate proposal might face taxation on digital activities of as much as 3 percent of turnover. Everyone from Alphabet to Twitter could see gross revenues levied the tax as they offer services such as advertising. The tax would apply to companies with total worldwide revenue exceeding €750 million.
And in news tied to GDPR, IBM and Mastercard said they formed Truata to help organizations conduct analytics and comply with data protection standards that come into effect in May 2018.
Earlier in the month, in Mexico, laws governing FinTech became official, creating a framework that sets in place rules for cryptos and other sectors within finance. The bill was approved by the Senate late last year. The law sets the stage for open banking and for sharing data across APIs.
Closer to home, the United States Senate this past week passed legislation that rolls back regulations stemming from the Dodd-Frank Act. The 67-to-31 vote lifts some restrictions on two dozen banks, with regulatory relief aimed at smaller banks and community banks. Banks with more than $250 billion in assets are deemed too big to fail, where once that threshold was $50 billion.
Separately, Sen. Elizabeth Warren said that she wants to create a law enforcement unit that will oversee big banks. She has introduced the Ending Too Big to Jail Act to pursue executives when their firms break financial laws. Under the proposal, executives at banks with at least $10 billion in assets need to show annually that they have conducted due diligence, with no findings of malfeasance.