August 19, 2022

Photo illustration: Christopher T. Fong/Protocol; Unsplash
Hello, and welcome to Protocol Policy! Today we look at how the new 15% corporate minimum tax will impact tech companies. Then in D.C., Sen. Chuck Schumer has been receiving direct donations from key tech players just as he’s supposed to be gathering antitrust votes. And there’s some new data out claiming to show the explosive growth of Apple Pay sign-ups, even as payments competitors cry foul.
After the Inflation Reduction Act was signed into law on Wednesday, I found myself wondering why the tech sector didn’t fight harder against the new 15% minimum corporate tax rate. The long-awaited corporate tax reform should in theory be a big deal, but markets hardly flinched after it became clear the legislation would pass.
First, it’s important to understand how the new minimum works: Companies make two different tax calculations under the new minimum tax system, then pay the greater one.
Many tech companies will feel no impact from the new minimum. An analysis from the Joint Committee on Taxation found that only around 30% of the Fortune 500 will be affected by the new minimum tax, and those companies are concentrated in industries such as manufacturing. Meta, Microsoft and Apple all paid more than 15% cash effective tax rates last year, according to a Washington Post analysis.
Tech got a critical deduction for research and development. R&D deductions are particularly beneficial for companies as the benefits last a long time and the resulting intellectual property can often be transferred offshore to avoid U.S. taxes.
The biggest open question for tech companies concerns stock-based compensation. Currently it isn’t allowed as an offset in the minimum tax calculation. That could be a big deal: In 2021, for example, Amazon paid out $12.8 billion in stock-based compensation, allowing the company to reap $2.7 billion in tax benefits.
There’s still time to lobby. The Inflation Reduction Act contains no mention of stock-based compensation, but that doesn’t necessarily mean it won’t be included. The IRS and the Department of the Treasury’s Office of Tax Policy will likely spend several years translating the legislation written by Congress into the tax code. This lengthy process gives tech companies ample opportunity to make their voices heard. And by the time this process gets into full swing, companies may very well be dealing with a Republican-led House and Senate, in turn creating an easier path for winning additional concessions.
— Hirsh Chitkara (email | twitter)
A version of this story first appeared on Protocol.com. Read it here.Sen. Chuck Schumer has received direct campaign donations from tech lobbyists and executives, Bloomberg reports. The timing of those donations is conspicuous, considering Schumer is supposed to be gathering votes for Klobuchar’s antitrust bill and he hadn’t previously received money from top tech lobbyists in election cycles going back to 2017, Bloomberg found.
The Alphabet Workers Union-CWA sent a letter to top company executives demanding abortion benefits be expanded to contract workers. As it stands, Google will pay for the cost of out-of-state abortion proceducres, but only for full-time employees.
And the lobbying of Google over abortion continues: A group of Republican state attorneys general, led Virginia’s Jason Miyares, wrote to Sundar Pichai complaining about Democratic effortsto get the company to take down so-called crisis pregnancy centers from search results. The facilities target people who want to terminate their pregnancies, but the centers don’t actually perform the procedures. The 17 GOP AGs said that if Google does limit the centers’ reach, they’d “act swiftly to protect American consumers from this dangerous axis of corporate and government power.”
The D.C. attorney general’s office has settled for more than $2.5 million with Instacart over claims the company “used tips left for workers to boost the company’s bottom line, and failed to pay required sales taxes.” His office says it hopes the money can be used for restitution although it’s still figuring out an exact plan to make that happen.New research sponsored by the CCIA Research Center reveals strong price competition between offline & online sales channels, with offline and online prices matching at least 95% of the time. Online prices respond quickly to changes in brick-and-mortar prices, and vice versa, resulting in lower prices for consumers.
The Biden administration plans to block China’s access to a special transistor design. That transistor type, FinFET, has been used since at least 2019 in high-volume production by China’s largest chipmaker, SMIC. Under the plans, the White House will attempt to block export of tools from the likes of Applied Materials, Lam Research and KLA.
President Biden has continued a Trump-era policy requiring the nearly 15 million people who apply for U.S. visas annually to hand over all social media handles from the previous five years. Even as the administration defends the policy in a lawsuit, it’s refused to make public a report on whether the rules actually accomplish anything.
Indiana is set to receive $100 million to build out a network of EV charging stations, but advocates for communities of color say the state has left them out of planning and done too little to make sure the stations are ultimately distributed equitably.
GM’s chief sustainability officer spoke with Protocol about the transition to EVs, securing battery materials and the charging picture now that the Inflation Reduction Act is law.A privacy researcher warned that TikTok can log users’ keystrokes when they’re using its in-app browser. In a statement to TechCrunch, the company flatly denied it “collect[s] keystroke or text inputs through this code” and said the function “is solely used for debugging, troubleshooting, and performance monitoring.” The same researcher recently wrote about Meta’s potential tracking of users’ activity in its in-app browsers.
Libs of TikTok claimed to have been permanently banned from Meta, only to return to the platform within a day. The popular right-wing account — which has been accused of spreading anti-trans falsehoods and getting conservative accounts to bully and threaten liberals — has been targeting the Boston Children’s Hospital.
YouTube is going to start watermarking its TikTok-like Shorts videos in an effort to remind people who might be watching creators’ content on other apps that Shorts75%: That’s the estimated percentage of iPhone users with Apple Pay activated, according to Loup Ventures research cited by the Wall Street Journal. That’s a considerable increase from the estimated 10% of activations in 2016 and 20% in 2017. (Activations also don’t necessarily mean Apple Pay is being widely used.) Apple’s competitors in the payments space have long complained that the company doesn’t open its NFT technology to third-parties, and EU antitrust investigators began looking into the matter earlier this year.
New research sponsored by the CCIA Research Center reveals strong price competition between offline & online sales channels, with offline and online prices matching at least 95% of the time. Online prices respond quickly to changes in brick-and-mortar prices, and vice versa, resulting in lower prices for consumers.
Hackers are succeeding with a new tactic: using deepfakes to clone the voice of employees' bosses. VMware’s principal cybersecurity strategist told Protocol that he’s heard from two corporate security chiefs who reported their companies were successfully attacked by that tactic. So next time you really need to end a call, maybe just hang up and say you were sure it was a deepfake. Better safe than sorry.
Thanks for reading — see you Monday!
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