It’s crucial that both the government and the technology giants establishing flagship offices here in the UK re-invest into the surrounding ecosystem, for it to continue thrive says Tom Strange at Constellation.
It’s undeniable that the general public’s trust in tech giants has dwindled over the past few years, with Facebook bearing the brunt of a number of exposés around how it has benefited from abusing user data.
The Cambridge Analytica scandal opened Pandora’s Box, and a number of other revelations of a similar ilk ensued. Only recently it came to light that several years’ worth of internal Facebook emails had been made public, emails that discussed selling access to user data to major advertisers such as Netflix, Lyft and Airbnb, as well as plans to upload call and text logs from Android phones to track user communication habits.
Now, of course, business plans change and companies pivot: in 2009 Facebook surpassed MySpace as the top social network, ending the year with 350 million users. Today’s Facebook is an entirely different beast, with around 2.2 billion active monthly users. Regardless of how a company scales, however, it’s crucial that it doesn’t abuse the trust of those it relies upon as a business.
It’s important to note that, despite the growing distrust, people are not yet boycotting the tech giants en masse. Nor has it discouraged consumers from purchasing the latest Apple, Samsung and Google devices. Despite the public outrage in regard to how they are using our personal information, the controversy that surrounds these businesses hasn’t impacted their popularity or growth: in fact, Facebook added one million monthly users last quarter in the US and Canada alone.
Clearly, these services are now too integral to our daily lives for us to be able to forgo them. Numerous measures have been threatened – or, already implemented – by governments in a bid to ensure that these companies counterbalance the damage they cause. Most recently, the UK government announced the introduction of a digital services tax in the annual Budget, aimed exclusively at tech giants: the first official government-level plan to address the growing issue of monopolisation.
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Though it’s unknown just how successful the digital services tax will be in practice, it presents – on the surface – an excellent opportunity to reinvest in digital skills and training, to develop the next generation technology and business leaders to help keep these technology giants relevant and on the front-foot.
There are a number of ways that this money could be used to reinvest in the sector. There could be grant increases for schemes such as Innovate UK, to ensure that cutting-edge entrepreneurs receive the funding required to develop their ideas and push UK innovation forward in fields such as AI and data science. It would also be beneficial to implement schemes to steer people towards a career in the tech sector from a young age – such as increased subsidies for socio-economically challenged students in the STEM subjects.
Initiatives like these would massively benefit SMEs and tech-giants alike, in terms of talent acquisition and overall development of ‘home-grown’ expertise. There is a clear opportunity to align stakeholder interests. Stimulating the tech industry is also vital to the continuation of our nation’s leading role in associated industries such as finance, because their future depends on benefiting from and adopting technology breakthroughs.
So far, however, little light has been shed on how income from the tax will be spent, with no clear re-investment strategy disclosed; but how this is done will determine the success of this initiative.
Reformation of corporate tax systems would be the most effective way to approach the issue, but it needs to be done in the right way. For example, an alternate approach to a revenue-based tax, such as a headcount-based levy, would be easier and fairer to apply to companies not generating £500m in revenue. This would prevent excessive penalisation, since the cost would grow proportionately to scale. It could generate higher income for the Treasury too.
For the UK to continue to position itself as a progressive and attractive destination for tech investment, it must nurture emerging and scaling businesses. Ensuring that the UK remains a key player on the global technology stage will be crucial for the economy in the wake of Brexit. It’s crucial that both the government and the technology giants establishing flagship offices here in the UK re-invest into the surrounding ecosystem for it to continue thrive.