Potential EU digital levy could get messy | #socialmedia


With help from John Hendel, Tatyana Monnay, Bjarke Smith-Meyer and Doug Palmer

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— Transatlantic tensions: A potential digital levy from the EU could be fueling U.S. consternation over digital service taxes.

— Watch your calendars: Sen. Richard Blumenthal (D-Conn.) said hearings for a federal privacy law could be around the corner.

— We’re listening: The Senate’s antitrust panel will haul in representatives from rival smart speaker-makers next week for a hearing on competition in the smart home market.

IT’S FRIDAY! MORNING TECH IS READY FOR THE WEEKEND. I’m your host, Benjamin Din. Fun fact: It’s hard to believe, but today marks my one-month anniversary of writing MT. Thanks for letting me into your inbox and putting up with my fun (and sometimes not-so-fun) facts. Truly a privilege.

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SIGNS OF UPSET OVER DIGITAL LEVY — Draft conclusions for next week’s EU-U.S. Summit in Brussels, obtained by our colleagues in Europe, show some disagreement over their final form, especially related to digital taxation. It could be a sign of trouble around the European Commission’s plans to propose an EU digital levy next month that would target all tech companies that offer their services across the bloc with annual revenues of at least $300 million. (Officials in Brussels have repeatedly emphasized this levy is expected to hit roughly 9,000 companies, not just American tech giants.)

A line from the draft, struck through, reads: “[US: We will refrain from imposing any unilateral tariffs related to the taxation of digital services].” That’s the clearest indication yet of Washington’s concerns about Brussels’ digital plans. (The potential EU levy is expected to be announced after the G-20 summit in July, regardless of what happens during separate talks between global policymakers on an international tax for multinational companies.) But President Joe Biden might need some more convincing when he arrives in Brussels on Tuesday.

— Now read this: The Irish government said Thursday that it will “push back” against demands to introduce a global effective minimum corporate tax rate of 15 percent. There’s drama all around, highlighting the challenges the Organization for Economic Cooperation and Development will face as it attempts to herd 139 countries through global tax talks.

— Also happening in Europe: Ahead of today’s G-7 summit in Cornwall, U.K., Biden met with Prime Minister Boris Johnson on Thursday. The two governments committed to a tech partnership in 2021-22, and said they will “embrace the promise and manage the peril of emerging technologies,” such as artificial intelligence, quantum tech and 6G.

They also said they wanted “a robust bilateral data access agreement” that both respects privacy and allows law enforcement agencies in both countries to obtain data when necessary. “We will work in partnership with technology companies to do this,” they wrote.

AND SPEAKING OF PRIVACY — Efforts to pass a national privacy law have stalled, but Blumenthal told Alex at a POLITICO Live panel on Thursday that he expects the Senate Commerce Committee to begin holding hearings on the matter within the next month or two.

— But: “The bandwidth here is also limited,” he conceded, “and there are a lot of competing issues,” such as infrastructure, voting rights and the filibuster. Blumenthal demurred on a specific timeline to expect a federal privacy law, but he said the end of the year would be “a good goal.”

Blumenthal emphasized that privacy talks have been ongoing and pointed to bipartisan opposition on the Hill to Facebook’s proposed Instagram platform for children. But the two sides will still have to work through sticking points that plagued privacy talks in the last Congress. “We’re going to have to really talk very intensively about the specifics of preemption, private rights of action [and] other possible obstacles where we’ve had disagreement,” he said.

— Bipartisan agreement: Both Blumenthal and Sen. Marsha Blackburn (R-Tenn.), who was also on POLITICO’s panel, said strong enforcement is a must when considering federal privacy legislation. They also agreed the FTC has an important role to play.

ANTITRUST PANEL CALLS ITS WITNESSES — The Senate Judiciary antitrust subcommittee will hear from industry and academic experts, on Tuesday at a hearing on competition in smart home technologies. Speakers are set to include Ryan McCrate, vice president and associate general counsel at Amazon; Wilson White, senior director for government affairs and public policy at Google; Jonathan Zittrain, a Harvard law professor; Matt Crawford, a research fellow at the Institute for Advanced Studies in Culture at the University of Virginia; and Eddie Lazarus, general counsel at Sonos.

“A market dynamic is emerging where only a handful of powerful tech companies dominate, which is especially concerning given the sensitive data they are collecting about us in our homes,” Sen. Amy Klobuchar (D-Minn.), who chairs the panel, said in a statement. Next week’s hearing will also focus on ways to protect consumers as these technologies become more popular, she added.

— Flashback: In January 2020, Sonos sued Google for patent infringement. It also told a House antitrust subcommittee that month that Amazon and Google had attempted to beat the speaker-maker with their own cheaper products priced below cost (allegations the two tech giants disputed or denied).

SENATORS SEEK BIPARTISAN PUSH FOR SEMICONDUCTOR FUNDING — Sens. Mark Warner (D-Va.) and John Cornyn (R-Texas) are urging House lawmakers to support the $52 billion that the Senate appropriated this week to help the U.S. support semiconductor plants. The money is part of the Senate’s newly passed U.S. Innovation and Competition Act.

During a call with reporters, Warner noted that this has been the only topic this year that has fostered cooperation between the House, the Senate and the White House. “My hope is the White House will weigh in heavily and we’ll certainly encourage our House colleagues in any way we can,” he said.

— It may not be easy: Though the bill, formerly known as the Endless Frontier Act, passed 68-32, it’s expected to face significant opposition in the House, due at least in part to the amendments attached to the bill during the Senate process. Reps. Michael McCaul (R-Texas) and Eddie Bernice Johnson (D-Texas) are working on similar legislation, and Warner said they will be crucial to getting the bill to Biden.

— Don’t you (forget about us): In comments filed Thursday, the Information Technology Industry Council urged the FCC to make it clear to the Biden administration and Congress that it would be a mistake to prioritize individual industries as the world navigates a global semiconductor shortage. The shortage has also taken a toll on the communications industry, and prioritizing specific industries “could seriously jeopardize important priorities” for the FCC, such as closing the digital divide and expanding 5G access, the group wrote.

THE LATEST IN BROADBAND TUSSLING — AT&T CEO John Stankey waded into the fight over broadband infrastructure Thursday, telling the Economic Club of Washington, D.C., that the White House was “misguided” in prioritizing internet networks run by local governments as part of its $100 billion broadband internet proposal. But he said he felt optimistic about the bipartisan “sausage-making” to assuage his concerns.

— Despite AT&T’s recent renewed interest in fiber buildout, the exec said he favored a mix of deployment methods like wireless and satellite, in line with certain other ISP interests. “I don’t think it’s optimally the best thing for the American taxpayer to think about putting fiber to every farmhouse in the United States when in fact, we can do it a variety of different ways with a variety of different technologies,” Stankey said.

— Movement on the Hill: Sens. Patty Murray (D-Wash.) and Rob Portman (R-Ohio) on Thursday revived the Digital Equity Act, a Biden campaign priority that would create grants aimed at helping people get online. Murray told reporters on a press call that she’s “optimistic” about the bill’s chances, and added, “We’re going to be pushing very hard to include this in any infrastructure bill that moves forward.”

And during a marathon markup session that ended before dawn Thursday, the House Transportation Committee approved H.R. 3703 (117), a bill from Reps. Anna Eshoo (D-Calif.), David McKinley (R-W.Va.) and Antonio Delgado (D-N.Y.) that would expand internet service to rural and underserved communities, as part of surface transportation reauthorization legislation.

The Senate confirmed Leslie B. Kiernan as general counsel of the Commerce Department. … Ulrich Kranz is joining Apple to help with its car project. He was the co-founder and CEO of electric vehicle company Canoo and a senior executive at BMW’s electric car division.

The Biden administration and the National Science Foundation are launching the National Artificial Intelligence Research Resource Task Force. It will be co-chaired by NSF’s Erwin Gianchandani and Lynne Parker, Biden’s AI czar from the White House Office of Science and Technology Policy. … Instacart is committing up to $1 million to amplify Black-owned brands within its marketplace.

Seeking solutions: Google is going after digital slander by changing its algorithms, via NYT.

Join the club: Baltimore could be the next city to ban facial recognition technology, Nextgov reports.

We’re watching you: “UK competition regulator plans probe into Amazon’s use of data,” via FT.

Podcast OTD: NYT’s Kara Swisher interviews “Big Tech’s tormenter in chief,” EU regulator Margrethe Vestager.

No way: Florida offered to delay enforcement of its new anti-deplatforming social media law. The judge said no, Gary Fineout reports.

We’re concerned: The Republican and Democratic co-chairs of the House’s Digital Trade Caucus are calling on Biden to press EU leaders on potential digital trade barriers that they say could hurt American tech companies.

Whoopsies: Uber offered to cover health insurance costs for some of its drivers and delivery workers. Two weeks later, it said it was a mistake, the Verge reports.

Op-ed: “Take the lead in 6G — or lose it to China,” via the Hill.

Dark sunset: Apple acquired popular weather app Dark Sky last year. Now its iOS app and website will shut down next year, per the Verge.

Tips, comments, suggestions? Send them along via email to our team: Bob King ([email protected]), Heidi Vogt ([email protected]), John Hendel ([email protected]), Cristiano Lima ([email protected]), Alexandra S. Levine ([email protected]), Leah Nylen ([email protected]), Emily Birnbaum ([email protected]), and Benjamin Din ([email protected]). Got an event for our calendar? Send details to [email protected]. And don’t forget: Add @MorningTech and @PoliticoPro on Twitter.

HAVE A GREAT WEEKEND!





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