Vince Cable, Rupert Murdoch and Margaret Hodge among figures to speak out as questions grow over government links with senior company executives
David Cameron has been accused by critics of getting too close to Google amid growing anger over the government’s £130m tax deal for being too lenient towards the tech giant.
Former cabinet minister Vince Cable, media mogul Rupert Murdoch and Margaret Hodge, the former chair of the Commons public accounts committee, all voiced concerns on Wednesday that Cameron and George Osborne had allowed the tech giant to hold too much sway.
Cable, the Lib Dem former business secretary, said Google had a “great deal of influence” in No 10 under the coalition and that Google’s billionaire executive chairman, Eric Schmidt, in particular enjoyed good links with Downing Street.
He said that “very close relationship probably made it very difficult for HMRC to be aggressive in its tax settlement with the company”.
Cable also said the UK’s decision to announce a tax deal unilaterally “undermines the effort to deal with this internationally”, including the reported attempts by France and Italy to extract higher levels of back taxes from Google.
Murdoch was another to accuse the “posh boys in Downing Street” of being too easily awed by Google. The multibillionaire executive chairman of News Corp, who ultimately controls the Times and the Sun, sent a series of tweets on Wednesday suggesting Downing Street was too close to Google and accusing the company of “paying token amounts for PR purposes”.
“Google has cleverly planted dozens of their people in White House, Downing St, other governments. Most brilliant new lobbying effort yet,” he wrote.
He made the pronouncements despite facing accusations during the phone-hacking scandal that he and his executives were too close to senior politicians in the UK and had too much lobbying power. Murdoch, a long-time critic of Google, has also seen his company tax affairs come under scrutiny in Australia.
Hodge said Google had purposely targeted all political parties in the company’s efforts to win influence in Westminster. “They are very, very clever at building their political links. If I am absolutely honest, they had as strong links with Labour. But their executives realise that these things really do matter, even when negotiating tax deals,” she told the Guardian.
MPs on Wednesday raised concerns about extensive links between No 10 and Google executives, including Cameron’s appointment of Schmidt to his exclusive business advisory board until July last year.
HMRC is still refusing to say how the £130m was calculated, whether it includes any fines or interest, and what effective rate of tax Google has ended up paying, citing taxpayer confidentiality.
But Labour leader Jeremy Corbyn said experts thought it amounted to an effective rate of around 3%, in contrast to rates of corporation tax of above 20% over the last decade.
Corbyn said most people did not have the luxury of personal meetings to discuss their tax affairs. “Millions of people are this week filling in their tax returns to get them in by 31 January,” he said. “They have to send the form back. They do not get the option of 25 meetings with 17 ministers to decide what their rate of tax is.
“Many people going to their HMRC offices or returning the [form] online this week will say this: ‘Why is there one rule for big multinational companies and another for ordinary small businesses and self-employed workers?’”
This exchange at prime minister’s questions forced Cameron into defending the deal, saying it was better than Labour’s failure to collect any back taxes from Google at all.
The prime minister said he was “genuinely angry” about HMRC’s failures under Labour and insisted it was wrong to say that Google was only paying a 3% rate of tax.
However, there were few in the Tory party willing to stand up vocally for the deal, with no one willing to repeat Osborne’s claim on Friday that it was a “victory”. Anna Soubry, a business minister, inflamed criticism of the government by telling the BBC’s World at One: “It doesn’t sound like an awful lot of money, of course it doesn’t. It would be silly to say otherwise. But if it is within the rules …”
Caroline Flint, a member of the Commons public accounts committee, called for Cameron to look at asking companies to publish their tax returns – which was rebuffed by the government.
She also said Cameron and other ministers should disclose whether tax was discussed in their meetings with Google.
“It’s fair for us to ask, if ministers and advisers have been having meetings with Google, for them to explain what those meetings are about,” she said.
Eva Joly, a French MEP and vice-chair of the European Parliament’s Special Committee on Tax Rulings, said she wanted Osborne to answer questions about the “very bad deal”.
A Google spokesman said: “After a six-year audit by the tax authority we are paying the amount of tax that HMRC agrees we should pay. Governments make tax law, the tax authorities enforce the law and Google complies with the law.”
Peter Barron, Google’s head of communications and public affairs, publicly defended the deal for the first time, saying criticism had not taken into account how international tax law works.
He wrote a letter to the FT, saying: “After a six-year audit we are paying the full amount of tax that HM Revenue & Customs agrees we should pay, including £130m in additional back tax. Governments make tax law, the tax authorities independently enforce the law, and Google complies with the law.”
Former Twitter product head Kevin Weil, who departed Twitter this week, has already scored a job running product for Instagram, according to reports. This would mean that Weil has landed in enemy territory, because Facebook owns Instagram.
Weil was one of a handful of executives who left Twitter on Sunday; others include engineering head Alex Roetter and also Katie Jacobs Stanton, who oversaw media. Jason Toff, general manager at Vine, announced that he was headed to Google’s virtual reality team.
Twitter has been a revolving door for several years now, particularly on its product team. Weil had been at the company since 2009, but just oversaw the product team for about a year.
Founder Jack Dorsey, who returned to the CEO position last year, is viewed as a product guy. He is involved with spearheading Twitter’s latest efforts to add new users.
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Stalled user growth has been a reason why Twitter’s stock has been hitting record lows. At $17 per share, Twitter’s market cap is under $12 billion, about a quarter of the $69 price tag the stock had just two years ago.
Facebook, on the other hand, has seen its shares almost double in the same timeframe. Its success has been, in part, due to strong growth on mobile, particularly Instagram.
Weil may or may not have been ousted (Dorsey insists his execs quit all at once), but if he’s headed to ultra popular Instagram, it looks like he will have the last laugh.
Facebook has more than doubled its profits in the final quarter of 2015 with a 51.7 per cent jump in revenue compared to last year.
Facebook’s revenue jumped 51.7 per cent partly due to an improved mobile app.
Facebook also said it now has 1.59 billion monthly active users as of December 31st, which is up 14 per cent from the end of 2014, and of those, 1.44 billion used the service on mobile devices, an increase of 21 per cent.
The better-than-expected results are thought to be because of new advertising formats and an improved mobile app which led to a sharp rise in ad sales.
The company’s total revenue rose to $5.84bn (£4.10bn) from $3.85bn (£2.7bn) a year earlier, with ad revenue increasing 56.8 per cent during the Christmas holiday shopping period, when spending on advertising normally peaks.
Facebook also now has 1.59 billion monthly active users as of December 31st 2015.
The company, which has the world’s most popular smartphone app, has also benefited from a surge in video views that has attracted advertisers.
Facebook said mobile ads accounted for 80 per cent of total ad revenue in the quarter, compared with about 78 per cent in the third quarter and 69 percent a year earlier. Apart from focusing on mobile, Facebook has been investing in other areas such as virtual reality, artificial intelligence and drones to connect the remotest parts of the world to the Internet.
The company has also begun monetising some of its other units, such as photo-sharing app Instagram, which surpassed 400 million users last year and began selling ads in September.
One of the world’s most popular image-sharing websites, Instagram, has launched a brand new app named Layout, aiming to help users create compelling photo collages and inventive new twists on the conventional Instagram picture. The new app, which went live this month, is aiming to cater to the estimated 20% of active Instagram users who tinker with their images to include multiple shots within one post.
The app is totally free and is aiming to provide a more seamless link between photo collage apps and Instagram itself. It’s easy and quick – users can choose photos from the Camera Roll, or use the app’s ‘Photo Booth’ feature, which takes multiple pictures in a row and positions them in fun and unique collage layouts.
Users can use up to nine images in one collage, and there are sixteen different image layouts to choose from. There’s the ‘Mirror’ feature, which flips the same photo horizontally, and ‘Flip’ turns images upside down. As with many regular photo-editing apps, users can drag to reposition the images within the frame, and pinch to zoom in or shrink the picture.
Once the right images are in place and positioned the way the user wants, the app is designed to make it super-easy for users to export the image straight into Instagram, where they can add captions, emojis and those all-important filters.
Layout has proven to be a hit with regular users, but also with brands. In the first few weeks since it launched, Victoria’s Secret, Sephora and Shutterfly have all used Layout to add a layer of interest to their Instagram images.
Ruth Porat, once the ‘Most Powerful Woman on Wall Street’ has been appointed by Google to take on the role of their Chief Financial Officer starting May 26th. Ms Porat, who is currently the Chief Financial Officer at Morgan Stanley, will replace Patrick Pichette, who unexpectedly announced he was leaving the search engine giant earlier this month.
Ms Porat has faced several attempts to lure her from her position on Wall Street over the last few years. In 2013, President Obama himself tried to lure her to Washington, where she was promised the role of Deputy Treasury Secretary – but Ms Porat elected to remain at Morgan Stanley rather than face the long and arduous vetting process associated with such high-level government roles. She had previously racked up 28 years of service at the investment bank, and mainly spent her time helping Amazon, eBay and Netscape through the so-called ‘dotcom boom’.
It’s estimated that the deal to bring Ms Porat to Google is an incredibly lucrative one. Sources report she will receive a $5m cash signing-on bonus, as well as $25m worth of shares in Google – not to be sniffed at. Her base salary will total around $650,000 per year.
Born in the UK but with much of her life spent in California, Ms Porat is said to be thrilled to be returning to what she considers her ‘roots’. Much of her childhood was spent in Silicon Valley, and Ms Poray is thrilled to be able to have a further influence on how tech companies shape everyday lives.
Facebook has reportedly been holding talks with some of the biggest media organisations in the world about hosting content on Facebook, rather than forcing users to head to external sites to consume news or entertainment content. With 1.4 billion users, social media is an absolutely vital source of traffic for media publishers, but some experts have warned publishers may not take too kindly to being ‘serfs in a kingdom that Facebook owns’.
Newspapers like the New York Times, which broke the story earlier this week, have spent much of the last decade attempting to find a lucrative business model that no longer relies on obsolete print media. Online-only publications are the way forward, and media organisations are battling it out to see who can come up with the distribution format that will win out – could hosting content on Facebook be the key?
The move certainly represents a risk for news organisations. With online display ads making up a large portion of their profits, news organisations could have to face up to losing colossal amounts of traffic to Facebook. According to well-placed sources around the deal, Facebook is in the process of discussing ways publishers can replace the money from display ads with advertising that would run alongside the content hosted on Facebook.
Whatever the result of the negotiations currently taking place, news organisations must come up with a new way of reaching audiences, now that much of the globe can access instant news from the palm of their hand. Whether Facebook will be their new way of reaching those audiences remains to be seen.
Micro-blogging social networking phenomenon Twitter has this week struck a deal with location-based platform Foursquare to enable users to tag their Tweets with businesses and other venues, as opposed to simple geographical locations.
In the past, Twitter users wanting to add a location to their Tweet could set their device to detect co-ordinates, which assigned a spot based on those parameters. The new partnership between Twitter and Foursquare means that instead of the randomly assigned ‘Times Square, New York’ tags, users can be a little more specific: ‘Starbucks, Times Square’, for example.
Since its launch, Foursquare has accumulated seven billion check-ins at 65 million different places around the world – from international tourist attractions to small local businesses. The platform is also renowned for its ‘user review’ function, and largely serves as a review platform for a multitude of organisations. Looking for a local coffee shop with great reviews? Foursquare is your best bet. Need a specialist clothing boutique to meet your niche demands? No doubt Foursquare will be able to source one, with some neat reviews too.
The deal between Twitter and Foursquare will provide businesses with plenty of exposure and could throw open doors for ‘loyalty Tweeting’ or other reward systems whereby users are given discounts or freebies for multiple Twitter check-ins. Businesses will also benefit from being able to see what customers are saying about their brand in more detail. Previously, businesses could only see tweets with certain hashtags or phrases, but by tracking the location-tagged tweets of their business, they can get a better idea of what their customers think of their services.