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1/23/2013
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France Considers Tax On Data Mining

Europeans, tired of U.S. tech companies profiting off their personal data without paying local taxes, look for new ways to generate income from Amazon, Google and the like.

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European governments like big data. In the United Kingdom, proposed legislation on making datasets open to the public declares, "Data is the 21st century's new raw material."

So far, so good. But really, all that behavioral data is based on what those country's citizens do as they interact with the state's medical or education system. In a way, it's the citizens' data, not the government's, which is just the collector of that information. Which begs the question: Who should profit off that information if it's then used for some other purpose?

It's an issue of worldwide relevance. Speaking on the BBC this week, Dr. Shirley-Ann Jackson, an adviser on big data to President Obama, said: "There are many concerns about privacy considerations, people, corporations, entities knowing so much about where we go and what we do."

In the context of public unhappiness about the paltry taxes U.S. companies, including Amazon, Google and Starbucks, pay their European hosts on the profits they make, maybe we shouldn't be that surprised that a possible rainmaker has emerged: France has suggested it should tax the collection of personal data by Internet firms.

[ Bricks-and-mortar stores are also keen to secretly collect data on customers. See Smile, Shoppers! Big Data Analytics Software Watches You. ]

It has to be stressed right at the outset this is only a suggestion -- it's come in the shape of a report (here, in French) that Paris is going to consider.

But the basic idea is straightforward enough. The study recommends France (which, like many others in the Eurozone, is struggling to clean up its balance sheets) could get new tax euros from a bunch of new economy activities that have slipped under the radar. These could be a levy on the collection of personal data (again, echoing London, seen as a kind of new "raw material" for the information economy), a cut of any profits on tailored services or advertising based on same, and so on.

The argument, as put forward by the authors, a senior advisor to the new French president and, perhaps ominously, a senior state auditor, is that Internet companies are conveniently ignoring the way users, through their usually totally unconscious contribution to data gathering and mining, become de facto aids "in the productive and distributive processes." In other words, they do the work for free, the company gets value from that work, but the customer or user has no rights at all on that data. So, if we have a "polluter pays" principle to help clean up carbon loading of the environment, why not (as the report calls them) "predator" pays for the Web?

"Corporations are already beginning to use data about their customers to be able to target what they sell in a better way. I don't view that as being malicious, I just think it's a new way of doing business. Corporations have always wanted to understand their customers," said Jackson.

It's far too early to see if these ideas will get any further. But in a time of ongoing fiscal downturn, Europe's politicians seem eager to explore innovative ways of filling their depleted state coffers. Just this week, France, Germany and nine other Eurozone countries got the green light to impose a financial transaction tax, i.e., a skim off the top of every share trade.

If they can do that, why can't they start taxing Google for making money off Jean-Paul, Enrique and Victoria every time they go online? Note that on releasing the report, Mme. Fleur Pellerin, the French minister overseeing digital innovation, announced that, "We want to work to ensure that Europe is not a tax haven for a certain number of Internet giants."

The next chapter of the new economy might be quite an interesting one -- and in hindsight, we might see this as the start of the move to a proper global debate on the real value of big data.

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