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Professor Mark Skilton from Warwick Business School comments on tech companies' reaction to French digital tax proposal

Digital tech companies have criticised France's new digital tax, which would levy a three percent tax on total annual revenues of those companies, as discriminatory. Professor Mark Skilton from Warwick Business School argues that a strategy is needed to deal with the monopoly that these organisations have in the global market.

He said: "This is another example of the politicisation of the online world and the large datasets and global influence that some observers call “transnational monopolisation” by the large American owned social media and search companies.

"It depends what side you are on in political debate but the actual facts of the economics of these cloud platforms is they dominate the global and local markets in countries in cases 70 to 90 percent with no market competition.

"The push back is their argument of being an “enabler” of the market and they have to pass on costs to consumers if anyone tried to regulate them. But like the FTC recently saying breaking up Facebook from its integrated Instagram, WhatsApp and Messenger could “be difficult”, it is a very hard problem to unpick these massive monolithic behemoths that have deliberately grown their power and acquired any likely competitors who come close to challenging their dominance.

"The action by the French has also been widely cited as seeking the global OECD to take this same action so that it becomes a legitimate concern that is addressed at the global level these companies currently operate across. The US are themselves investigating these companies anyway so the politicisation of tariff threats is just another noise that missing the underlying economic reality of these giants and their unfair advantage on local government economies, let alone the problems that are also emerging in fake news and the spread of misinformation and lack of privacy. A more drastic breakup strategy is needed to redress a situation that has gone on too long with the early internet wild-west and the realisation of the need for better governance."


Peter Thorley
Media Relations Manager (Warwick Medical School and Department of Physics)


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