Griffin on Tech: Trump’s digital tax threat and InternetNZ’s membership surge
A memo Donald Trump issued from the White House last week has cemented his power alliance with America’s Big Tech bosses.
In a letter titled Defending American Companies and Innovators From Overseas Extortion and Unfair Fines and Penalties Trump took aim at the digital services tax that have been introduced, mainly by European Union nations, in an effort to claw back revenue from Big Tech companies that send the bulk of their profits to low-tax jurisdictions.
For years, the EU and many other countries, New Zealand and Australia included, have been arguing for a fairer treatment of tax that sees companies pay it in the country where the revenue is generated. A long-winded tax review by the OECD set out to make the international tax rules fairer, which could potentially see New Zealand gain tens of millions of dollars in additional tax revenue from the likes of Google and Meta.
And so we should. Those companies have been (quite legally) able to reduce their tax burden for years, employing few New Zealanders but delivering highly profitable services to us via their overseas infrastructure.
But Trump last Friday put the world on warning - tax American tech companies and he will retaliate with tariffs. It isn’t a new threat. In fact, President Biden made similar one but never followed through on it.
Trump has a new understanding with the likes of Mark Zuckerberg, Elon Musk and Jeff Bezos - scratch my back, and I’ll scratch yours.
“My Administration will not allow American companies and workers and American economic and national security interests to be compromised by one-sided, anti-competitive policies and practices of foreign governments,” Trump wrote in his memo.
“American businesses will no longer prop up failed foreign economies through extortive fines and taxes.”
Trump didn’t mention the OECD tax reforms, but given his tendency to disregard multilateral institutions, there’s a good chance the US will now do everything it can to kill them.
We are very much in the America-first era, where Trump sees efforts for a more equitable relationship with Big Tech companies as “appropriating revenues that should contribute to our nation’s well-being, not theirs”.
In real terms, it means that any sort of media bargaining arrangement between tech companies and local media companies, or anything resembling a digital services tax, are now likely off the table. The consequences of our exporters being hit with a 25% tariff would be devastating.
But the problem remains and we’ll have to think carefully about alternative ways of tackling it as we face four years of a US administration that views the rest of the world as ripe ground to extract value to make America great again.
Misinformation and InternetNZ’s membership surge
The roll-back of political correctness, the dismantling of DEI and efforts of DOGE to gut US government agencies have also set the scene for a crisis a world away at InternetNZ, the body which advocates for internet consumers and manages the .nz level domain.
InternetNZ has seen its membership triple from a few hundred to over 1,000 members on the back of a campaign from the Free Speech Union to oppose the organisation’s efforts to revise its constitution.
InternetNZ is undertaking to put Te Tiriti o Waitangi at the heart of its work, increase Māori representation on its board and strive to ensure that New Zealand internet users can use the internet free from harm. As recently as 2023, none of that would have provoked much opposition.
But the political and social climate has changed. David Harvey, a retired, tech-savvy District Court judge read the proposed changes to the InternetNZ constitution and was alarmed.
“What seems almost certain is that InternetNZ will use its new powers to decide to remove .nz domain names from organisations they perceive as ‘harmful’,” he wrote in a newsletter that appears to have gone viral among free speech advocates.
That led InternetNZ President Stephen Judd to yesterday issue a statement addressing “misinformation” about InternetNZ’s intentions.
“We can only remove a domain in very limited circumstances: when ordered by a court when registration details are incomplete or fraudulent, or during extraordinary emergencies like the aftermath of a mass shooting. Such actions are extremely rare," he pointed out.
It’s hard not to see the sudden scrutiny of internetNZ as anything other than anti-woke sentiment.
But InternetNZ now faces a highly contested process as it finalises its new constitution, with free speech advocates examining every line of the text - and putting their hands up for election to the board. In some ways, the attention - and membership boost, are useful.
InternetNZ, once a policy powerhouse and organiser of great events like Net Hui has lost its mojo in recent years. At a time when we face more complex and challenging issues in the digital realm than ever before, we need a body that facilitates discussion and stands up for internet users.
But it is also true that inequity in the digital space, in everything from broadband access to digital skills, remains a pressing issue, which is why, for instance, InternetNZ is seeking to increase Māori representation on its board. Harm on the internet is real, and the tech companies have now been given a free pass by Trump to dial back their efforts to address it, in the name of free speech.
With its new cohort of members (membership costs just $21), InternetNZ could be a fractious group for a while. The discussion will be messy and loud. But the opportunity there is to make itself relevant once again beyond its guardianship of the New Zealand internet domain, and raise the profile of the issues important to all New Zealand internet users.
