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The global fight over Silicon Valley giants’ tax bills is entering a pivotal stretch

The United States took a major step toward resolving trade tensions over foreign taxes on Silicon Valley companies Friday by striking a deal with 135 other countries for new global corporate tax rules that will bring in billions to governments from the world’s biggest companies. 

The United States has been at odds with global allies, including the United Kingdom and India, over laws they passed that narrowly tag Silicon Valley companies with higher tax bills. Tech industry leaders and the White House have pushed instead for broader taxes on big corporations.

The deal, if implemented, would create a 15 percent minimum tax for major corporations globally and force companies to pay more in countries where they do business but aren’t based out of. It could mark a major victory for Silicon Valley by requiring countries to roll back the tax on digital services they enacted that put giants like Google and Apple in their crosshairs.

Tech companies have long said such laws put U.S. companies at a competitive disadvantage abroad, and the Biden administration went to bat for them in the global tax talks led by the Organization for Cooperation and Economic Development.

The central question at play: Does a level playing field mean Silicon Valley giants, some of the richest companies in human history, need to pay a steeper tax rate to create fairness and competition? Or does targeting those companies make it inherently unfair?

The deal was celebrated by tech heavyweights, like Google’s Vice President of Government Affairs and Public Policy Karan Bhatia. 

But U.S. tech behemoths like Google and Amazon aren’t out of the woods just yet. 

Major hurdles stand in the way of policymakers’ plans to enact the rules by 2023, including that they will hinge in part on President Biden’s ability to get the deal greenlit by the U.S. Congress. 

Treasury Secretary Janet Yellen told ABC News on Sunday that she expects the agreement to be worked into a reconciliation package. Biden and congressional leaders have been negotiating one for weeks. 

And Yellen said she’s not sweating the outcome, as my colleague Jeanne Whalen reported

“I am confident that what we need to do to come into compliance with the minimum tax will be included in a reconciliation package,” Yellen told ABC News. “I hope that it will be passed and we will be able to reassure the world that the United States will do its part.”

That tactic could add another major wrinkle to and put even more pressure on the topsy-turvy reconciliation talks, upon which Biden has already staked the bulk of his legislative agenda so far. 

While Biden wouldn’t need GOP buy-in for the plan to advance under reconciliation, Republicans have attacked it as hurting U.S. competitiveness.

The deal will also need to be taken up and ratified by other countries, including at an upcoming meeting of G-20 finance ministers slated for later this month.

If those plans crumble or hit any major snags, it could open the door for other countries to reconsider and move ahead with their own plans for digital service taxes, reigniting trade tensions with the United States and Silicon Valley. 

Tech industry leaders are anxious to see countries solidify their agreement to roll back their existing digital service taxes and commit to not pursue similar measures going forward.

Christian Borggreen, vice president and Brussels office chief for tech trade association CCIA, said in a statement Friday that the group is “pleased to see that the agreement includes a clear obligation on all parties to remove all digital services taxes and similar measures, and to commit not to introduce similar measures in the future.” CCIA counts Apple, Amazon, Facebook and Intel as members. (Jeff Bezos, who founded Amazon, owns The Washington Post.)

Dane Snowden, president of fellow tech trade group the Internet Association, called on governments in a statement to “move swiftly to eliminate these discriminatory taxes.”

The OECD explicitly stated that the proposed deal “will require all parties to remove all Digital Services Taxes and other relevant similar measures with respect to all companies, and to commit not to introduce such measures in the future.” 

And it also states, “No newly enacted Digital Services Taxes or other relevant similar measures will be imposed” until either the end of 2023 or until the deal is enacted.

Leaders at OECD, the White House and in Silicon Valley are hoping it’s smooth sailing ahead on those plans, and that disputes domestically and abroad won’t upend them. But with so many variables up in the air, only time will tell if they succeed.

“This is really something we need to make globalization work and to make it work for American workers,” Yellen said.

Our top tabs

Blue Origin fostered a toxic workplace, current and former employees say

The “authoritarian bro culture” at Jeff Bezos’s Blue Origin affected decision-making at the company and was pervasive, Christian Davenport and Rachel Lerman report. The issues caused low morale and high turnover at the company, which hasn’t been able to successfully compete with Elon Musk’s SpaceX, current and former employees said.

“It’s bad,” a former top executive said. “I think it’s a complete lack of trust. Leadership has not engendered any trust in the employee base.”

Blue Origin takes “all claims seriously, and we have no tolerance for discrimination or harassment of any kind,” said Mary Plunkett, Blue Origin’s senior vice president of human resources. The company has an anonymous hotline and encourages workers to speak with human resources or leadership confidentially, she said. 

Bezos, who also owns The Post, declined to comment.

Facing scrutiny, Facebook executive says social media giant will unveil product changes for teens

The social media giant will launch a feature to nudge teens away from content that they look at often and “may not be conducive to their well-being,” Facebook executive Nick Clegg said. The company also plans to encourage teens on Instagram to take breaks.

The planned changes come as lawmakers scrutinize Facebook, with many focusing on its effects on children. Facebook whistleblower Frances Haugen, who leaked internal studies on the issue and other subjects to the Wall Street Journal, and Facebook executive Antigone Davis have testified before Congress on the issue in recent weeks.

Apple is appealing a judge’s ruling in Epic’s antitrust lawsuit

The tech giant wants an appeals court to block Judge Yvonne Gonzalez Rogers’s order that it change some of its practices, the Wall Street Journal’s Tim Sweeney reports. The appeals process could take years.

Gonzalez Rogers ordered Apple to allow developers to “steer” users to alternatives to its payment service, which gets a 30 percent cut of most transactions. 

Apple initially said it was “very pleased” with Gonzalez Rogers’s ruling and called it a “huge win.” Epic, which already filed a notice of appeal in the case, declined to comment.

Rant and rave

Facebook global affairs chief Nick Clegg made the rounds on Sunday morning news shows this week. Facebook spokesman Andy Stone:

The internet, including Congress, had thoughts. Sen. Richard Blumenthal (D-Conn.):

Anti-Defamation League CEO Jonathan Greenblatt:

Inside the industry

Competition watch

Trending

Daybook

  • The House Financial Services Committee’s Task Force on Artificial Intelligence holds a hearing on AI ethics on Wednesday at noon.
  • The Atlantic Council hosts an event on the geopolitics of international technology standards on Thursday at 10 a.m.
  • The House Energy and Commerce Committee’s consumer protection panel holds a hearing on legislation relating to e-commerce sites, gig workers and start-ups on Thursday at noon.
  • National Intellectual Property Rights Coordination Center Director Matthew C. Allen and executives from Amazon and Walmart discuss counterfeit goods in e-commerce at a Center for Data Innovation event on Thursday at 1 p.m.

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