This Week Shows How Hard It
The Seattle City Council voted 9-0 last month to approve an annual $275-per-employee tax on big employers like Amazon. The tax was expected to raise about $47 million a year for services for the homeless and construction of affordable housing. But Tuesday, less than a month after passing the tax, the council voted 7-2 to repeal it.
The victory for Amazon comes amid growing concern about the power and influence of big tech companies, and their responsibility for the spread of fake news, sloppy handling of user data, rising income inequality, and other ills. But a look at this week’s headlines shows getting tough on tech is harder than many expected. The most tech-friendly candidate in San Francisco’s mayoral race appears to have won. The Federal Communications Commission’s net neutrality rules are no more, freeing broadband providers favor certain content over others, and to charge companies extra fees for “fast lane” access. And AT&T got the go-ahead to buy Time Warner, overcoming an federal antitrust challenge.
Seattle’s corporate tax looked at first like an example of elected officials standing up to a tech giant. But the version that passed last month was a compromise. Councilmembers originally proposed a $500-per-employee tax that would have eventually transitioned into a payroll tax on companies making at least $20 million in revenue. In response, Amazon announced it was halting construction on a new office building and considering subleasing space in another instead of hiring more staff in Seattle.
Seattle Mayor Jenny Durkan negotiated a compromise, cutting the tax nearly in half. Amazon announced it would resume construction after the measure passed, but company spokesman Drew Herdener warned the company still wasn’t happy and suggested it might hire fewer people in Seattle. Amazon donated $25,000 to a campaign for a ballot measure to overturn the tax in November.
Councilmember Lisa Herbold told the Seattle Times she voted to reverse the tax to avoid a months-long battle over a ballot measure, and because of recent polling on the issue. A KIRO-TV poll found that 54 percent of respondents opposed the corporate tax and only 38 percent favored it.
Meanwhile in San Francisco, mayoral candidates Mark Leno and Jane Kim teamed up to oppose London Breed, perceived as the tech industry’s favored candidate. Although Leno and Kim didn’t explicitly target Breed over tech-industry support, the candidates urged voters to “stand against special-interest Super PAC spending.”
It doesn’t look like voters were swayed. Ballot counting moved slowly under San Francisco’s ranked-choice voting system, but Wednesday afternoon, Leno conceded the race.
On the other hand, the end of the FCC’s net neutrality protections might seem like a setback to big tech. Giants such as Google and Facebook generally favored the rules, largely through the Internet Association trade group. They’re also helping fund the legal fight against the FCC’s decision. But the biggest names in tech were relatively quiet on the subject of net neutrality this year. That could be in part because net neutrality doesn’t affect their business models as much as it did in the past.
In fact, the end of net neutrality could help the incumbents more than it hurts them, if upstarts are forced to pay extra or negotiate special deals in order to offer content at the same speeds that, say, Netflix and YouTube do. That makes the end of net neutrality protections more of a victory for big telecom companies than a problem for tech giants.
Telecom won again with AT&T’s court victory in the Time Warner case. The judge’s refusal to apply antitrust law to stop the deal will likely spur another round of telecom and media consolidation. Wednesday, Comcast increased its offer for key 21st Century Fox assets, to fend off a rival bid from Disney. And it could forestall antitrust scrutiny of Amazon, Google, and Facebook as they grow ever larger.
Some of this week’s setbacks for tech opponents may have to do with the public not sharing the outrage expressed by pundits and politicians. Even as Tucker Carlson and Senator Elizabeth Warren alike railed against tech last year, polls found that consumers still viewed major tech brands very favorably.
Other research shows that consumers are less happy with telecom companies. The latest American Customer Satisfaction Index found cable companies and internet service providers tied for dead last in customer satisfaction. Wireless carriers were also near the bottom. It should come as little surprise then that other polls find that voters across the political spectrum favor net neutrality protections.
The fact that the government now struggles to rein in some of the least liked companies in the world doesn’t bode well for efforts to tackle companies that consumers love.