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December 02, 2020

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Today's Login is 1,393 words, a 5-minute read.

1 big thing: The looming digital services tax showdown

An illustration of a computer mouse with its tangled cord shaped into a dollar sign.
Illustration: Sarah Grillo/Axios

A fight over foreign countries' efforts to tax big American tech companies' digital services is likely to come to a head in January just as Joe Biden takes office, Axios' Ashley Gold reports.

The big picture: Governments have failed to reach a broad multilateral agreement on how to structure such taxes. That could leave the American firms that dominate consumer digital services — including Google, Facebook, and Apple — stuck with massive tax bills from different countries.

Why it matters: The fight over digital service taxes has become a proxy for larger international conflicts, pitting European resistance to the power of American tech giants against a Trump-style "America First" protectionism in Washington.

Catch up quick: A digital services tax calculates what portion of gross revenue a company like Facebook or Google earns from activities and users within a nation's borders and requires the company to pay a percentage of that amount.

  • These taxes differ from country to country, but typically only apply to very large companies.
  • The French tax that's at the front of this fight sets the rate at 3%.

The companies, along with global trade negotiators, are closely watching whether the Biden administration will change the tenor of the conversation.

  • The issue of global digital taxation "urgently requires a multilateral solution," and the Biden administration should lead the charge, Facebook's global policy chief Nick Clegg wrote in a Washington Post op-ed Monday.

Background: Since 2019, a group of 137 countries (including the U.S.) has been negotiating the issue of digital taxes at the Organization for Economic Cooperation and Development, aiming to develop a new framework of uniform international digital tax rules.

  • The project has moved slowly in the face of tension between the U.S. and the EU.
  • Pascal Saint-Amans, head of the tax policy center of the OECD, told reporters in October that the new rules would probably be decided by June 2021.

France forged ahead late last month with its own plans for a digital services tax.

  • France has agreed to revoke its tax once an international deal is completed, and had planned on suspending its collection until then. It switched gears after concluding the Trump administration was not prioritizing the issue.
  • Italy and the U.K. have also laid out plans for their own digital services taxes, and Canada is planning one for 2022.

Between the lines: The Trump administration has battled Big Tech over other issues, but the tax fight puts the U.S. in a more traditional role of defending tech firms as American success stories.

  • With France moving forward, the Trump administration is set to retaliate by imposing tariffs on certain French goods including makeup, soap and handbags on Jan. 6, though they may move to invoke the tariffs earlier.
  • The tariff escalation would muddy the waters for any effort by Biden's team to press reset on negotiations.

What's new: France, which has said it aims to earn €400 million this year from the tax, issued requests for digital tax payment in the millions of euros from U.S. companies like Facebook and Amazon late last month, Reuters reported.

What's next: France says that if the U.S. goes ahead with the planned tariffs in January, it will seek retaliation from the EU.

2. Making sense of the Salesforce-Slack deal

A stylized version of the Slack logo with arrows pointing in multiple directions.
Illustration: Aïda Amer/Axios

As with most big deals in tech, the key question to ask about Salesforce's $28 billion purchase of Slack isn't whether the price is too high or low, but whether the combination makes sense.

Between the lines: Big Tech companies have plenty of their own cash (and can easily borrow lots more), but only a finite amount of time to innovate before rivals capture their turf.

  • In explaining the deal to investors on a previously scheduled conference call, CEO Marc Benioff characterized the move as a bet that the pandemic-driven shift to remote work isn't a temporary blip but rather a permanent transformation.

The big picture: Benioff has long considered acquiring widely used business tools as a means to expand Salesforce's footprint beyond the sales and marketing teams and into the broader workforce.

  • Salesforce kicked the tires on Twitter and lost out to Microsoft in a bidding war for LinkedIn.

Slack has the lead in its still-nascent space, but was facing a challenge of its own — namely that Microsoft's rival Teams was bundled into Office subscriptions.

  • As a standalone company, Slack couldn't easily manage such a move, nor could it afford to get into a price war.

What they're saying: Box CEO Aaron Levie praised the deal, noting how Salesforce has grown beyond its initial goals of taking on Oracle and SAP.

  • "This isn't just about the future of 'collaboration,'" he wrote in a blog post. "This is a new 'operating system' for how knowledge workers will interact in the future, connecting the front office, back office, and customers all together in a single platform."

Yes, but: The death of a standalone Slack isn't just sad for customers who liked the upstart, but also a blow to those who held up the company as proof that small companies could still take on the Big Tech giants.

What's next: The deal still needs regulatory approvals and also a formal go-ahead from shareholders (although apparently 55% of Slack's voting power is already committed to supporting the sale).

3. Part of HP is leaving Silicon Valley for Texas

Hewlett-Packard Enterprise, one of two public companies that now bear the HP name, said Tuesday it's moving its corporate headquarters from San Jose, California, to Houston.

Why it matters: The move isn't financially huge, as HPE already had a significant number of employees based in Houston, the old hometown for Compaq, which merged with HP in 2001. But the symbolism of a Silicon Valley icon picking up and leaving is not a good look for the Bay Area.

Details: HPE said it doesn't plan layoffs and it will keep a significant presence in California.

  • Silicon Valley "will continue to be a strategic hub for HPE R&D, innovation and technical talent," it said in a blog post.

The big picture: Enterprise cybersecurity firm Tanium is also leaving Silicon Valley for the Seattle suburbs, as reported by GeekWire.

  • "San Francisco is not the city it was 20 years ago," CEO Orion Hindawi told GeekWire.

Yes, but: HP Inc., the company that makes PCs and printers, is staying put in the Bay Area, a spokesperson told Axios.

Between the lines: Taxes surely played a role, as Texas has lower corporate taxes and no state income tax. However, it's not that simple, some experts say, noting Texas has higher sales and property taxes.

My thought bubble: The threat to Silicon Valley's industry centrality is less from changes in the region than from the way the pandemic has opened the floodgates to remote work, offering employees that want more space or better schools an option to get those benefits without changing jobs.

4. We're working longer days during the pandemic

An illustration of a worker on an island.
Illustration: Sarah Grillo/Axios

If you're feeling like working remotely has killed your lunch break or kept you on email later than usual, you're not alone, Axios' Erica Pandey reports.

Americans have been working an average of 32 more minutes a day since the beginning of the pandemic, according to research from software maker Atlassian.

Why it matters: While 32 minutes may not seem like a lot, that extra time working is adding up and contributing to a rapidly escalating crisis of burnout among American workers.

The trend is consistent across several countries: In Israel, the average professional is working 47 more minutes a day; in India, 32 more minutes; in the U.K., 30; and in Sweden, 25.

5. Take Note

On Tap

Trading Places

  • Roku has hired Brian Pinkerton, who worked on Siri at Apple and was formerly CTO at the Chan Zuckerberg Initiative. At Roku, Pinkerton will be senior VP of advanced development, focusing on future software work.
  • ServiceNow named former Salesforce executive John Ball to lead its customer workflow business unit.
  • Opendoor named Kushal Chakrabarti as VP of research and data science.

ICYMI

6. After you Login

To end today, I offer you this soothing video and its accompanying words of wisdom.