EU ready to move alone on digital tax if no global deal

BRUSSELS (Reuters) – The European Commission said the EU should proceed with an overhaul of taxes on digital firms even if the rest of the rich world did not follow suit, a draft report said.

The document is part of an EU push to tap more revenues from online multinationals such as Amazon and Facebook, who are accused of paying too little tax in Europe by routing most of their profits to low-rate countries such as Ireland or Luxembourg.

The draft report, to be adopted on Thursday, said that on average brick-and-mortar multinationals pay in taxes in the EU more than twice what their digital competitors do.

Traditional large firms face a median 23.2 percent tax rate, while digital giants do not pay more than 10.1 percent – and when they sell directly to customers, rather than to firms, their effective rate goes down to 8.9 percent, data cited by the Commission showed.

An earlier report by a European lawmaker said EU states may have lost in tax revenues up to 5.4 billion euros ($ 6.5 billion) just from Facebook and Google, now part of Alphabet, between 2013 and 2015.

“A level playing field is a pre-condition for all businesses to be able to innovate, develop and grow,” the Commission said, adding that fairer taxation of the digital economy was urgently needed.

Partly because of the uneven taxation, revenues in the EU retail sector grew on average by only 1 percent a year between 2008 and 2016, while in the same period revenues of the top-five online retailers, such as Amazon, grew on average by 32 percent per year, the Commission’s report says.

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The document, seen by Reuters, will be presented at a summit of EU leaders on September 29 dedicated to digital issues. Despite divergences and scepticism among some smaller states, the 28 EU countries are expected to find common ground on digital taxation by December.

The Commission is seeking a compromise among rich countries worldwide in a bid to reduce opposition from EU states that fear losing competitiveness if the EU moves ahead on its own in this field.

But “in the absence of adequate global progress, EU solutions should be advanced within the single market”, the document said, adding that a legislative proposal may be presented in the spring regardless of global developments.

The best way to tackle distortions would be to review the notion of “permanent establishment” so that firms could be taxed also in countries where they do not have a physical presence, the Commission said.

At the moment online companies can often avoid paying taxes in countries where they generate large revenues because they do not have a physical presence there.

A proposal to change the corporate tax base is already under discussion in the EU. The Commission believes it represents “a basis to address these key challenges”, but needs the unanimous support of EU states to turn the plan into law.

To move ahead more quickly, the Commission said short-term solutions could be considered. They include an “equalization” tax on turnover, as proposed by France and backed by 10 EU countries, the report said.

Alternative short-term options would be a withholding tax on payments to digital businesses and a levy on revenues from advertisements or other services provided by digital firms.

But short-term options “have pros and cons, and further work is needed”, the Commission said, warning that they may go against double-taxation treaties, state aid rules, fundamental freedoms and EU international commitments under free trade agreements and the World Trade Organization (WTO).

Reporting by Francesco Guarascio @fraguarascio; Editing by Philip Blenkinsop and Gareth Jones

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Uber reviews Asia business over bribery allegations in U.S.: Bloomberg

(Reuters) – Uber Technologies Inc [UBER.UL], which is the subject of a federal probe into whether it broke bribery laws, has started a review of its Asia operations and notified U.S. officials about payments made by staff in Indonesia, Bloomberg reported, citing people with knowledge of the matter.

A source familiar with the matter told Reuters that the Bloomberg report was accurate.

Uber said in August it was cooperating with a preliminary investigation led by the U.S. Department of Justice into whether company managers violated U.S. laws against bribery of foreign officials, specifically the Foreign Corrupt Practices Act.

Uber hired law firm O‘Melveny & Myers LLP to investigate how it obtained the medical records of an Indian woman who was raped by an Uber driver in 2014, Reuters reported in June.

O’Melveny & Myers is now examining records of foreign payments and interviewing employees, raising questions about why some potentially problematic business dealings were not disclosed sooner, Bloomberg said on Tuesday. bloom.bg/2xdk6PT

Attorneys are focused on suspicious activity in at least five Asian countries: China, India, Indonesia, Malaysia and South Korea, Bloomberg said, adding that Uber’s law firm is reviewing financial arrangements tied to the Malaysian government that may have influenced lawmakers there.

Uber and the DoJ could not immediately be reached for comment.

Reporting by Ismail Shakil in Bengaluru and Peter Henderson in San Francisco; Editing by Leslie Adler

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Why Apple iOS 11 Won’t Run Some of Your Apps

After users download iOS 11 to their iPhones and iPads starting today, they might discover some of their apps no longer work.

Apple’s iOS 11 will not support slow and old apps that use a technology called 32-bit, rendering those programs useless. Additionally, Apple will not allow users to find 32-bit apps in its App Store, effectively killing them off until the app developers update their older apps to support the new 64-bit process, which speeds up apps and makes them more usable on newer iPhones and iPads.

When users download iOS 11, they’ll get a notification from the operating system, saying that a particular app “needs to be updated.” Apple’s notification says that the app “will not work with iOS 11” and it will be banned from use until it’s updated.

Apple (aapl) started to use 64-bit apps in 2013 after the company launched the iPhone 5S, the first smartphone from the company to come with a 64-bit processor. At that time, Apple pressured developers to start taking advantage of the faster chip technology, but still allowed 32-bit apps to be developed and brought to its App Store. In 2015, however, Apple announced that all new apps and updates would need to run on 64-bit.

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While the majority of app developers heeded Apple’s warning and updated their programs, there are still some that have not, which means they haven’t been updated in over two years.

Apple announced last year that it would start to inform users of older and outdated apps, and this year, decided to finally stop supporting the older programs. Since last year, users have only been informed that their older apps would “slow down” their devices but Apple would allow them to be used. Now, though, Apple has seen enough and is stopping them in their tracks.

Apple’s iOS 11 will be available for download starting today. The software is free and users will get a notification on their iPhones and iPads when it’s ready to be downloaded.

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Apple iPhone X Might Be Cannibalizing iPhone 8

Apple’s iPhone 8 pre-orders are a little slower than previous models, and the handset might have an unlikely foe to thank for it.

In a note to investors this week, KGI Securities analyst Ming-Chi Kuo said that iPhone 8 and iPhone 8 Plus pre-orders are sluggish because of strong demand for Apple’s upcoming iPhone X. In the note, which was earlier reported on by Apple-tracking site 9to5Mac, Kuo said pre-order shipment dates after initial orders are placed usually stands around three to six weeks. Depending on the model they want, if consumers order an iPhone 8 or iPhone 8 Plus today, they might be able to get it on Friday’s launch day or need only to wait a week for the handset to arrive.

Apple (aapl) has been offering pre-orders on new iPhones for years. And in most cases, the handsets it starts selling in September see their initial supply run out soon after the company turns on pre-order sales. By mid-morning of pre-order day, it’s not uncommon for new purchasers to have to wait weeks, if not a couple of months, for their smartphones to arrive.

But the iPhone 8 and iPhone 8 Plus were different. The smartphones were announced alongside the iPhone X, a major upgrade, featuring a big screen that nearly entirely covers the face and a revamped design featuring glass and stainless steel. Apple has called the iPhone X the “future” of smartphone technology, which might have made some would-be iPhone 8 customers feel like they were buying outdated hardware.

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For its part, Apple (aapl) tried to allay some of those fears by bringing a similar glass finish to the iPhone 8 line. Apple’s handsets are also running the same A11 Bionic chip that users would find in the iPhone X, and all three of the company’s new smartphones support wireless charging.

Still, iPhone 8 and iPhone 8 Plus models are readily available, marking a stark departure from Apple’s recent iPhone pre-orders.

According to Kuo, it appears a large number of Apple customers are simply waiting for Apple to offer pre-orders on the iPhone X starting on October 27. And although the iPhone X comes with a hefty $ 999 price tag to start, at least the early adopters don’t seem concerned.

While Apple hasn’t commented on pre-orders, it’s unlikely the company would bemoan customers waiting to buy the iPhone X.

On Monday, researcher Susquehanna International Group estimated that Apple pays $ 581 for the components inside its iPhone X, giving the company a profit margin of $ 418 per unit before it factors in assembly cost. Last year’s iPhone 7, which cost $ 649, cost Apple $ 401 for its components. That translated at the time to a $ 401 profit. Apple, in other words, should make a surprisingly high margin on the sale of each iPhone X.

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Tencent, Guangzhou Auto agree to collaborate on connected cars

HONG KONG (Reuters) – Chinese internet giant Tencent Holdings and Guangzhou Automobile Group Company Ltd said on Monday they had agreed to collaborate on connected cars.

The two companies will also explore investment in areas such as auto-related e-commerce, new energy cars and auto insurance, Guangzhou Automobile said in a filing.

Guangzhou Automobile Group said it would aim to tap Tencent’s expertise in mobile payments, social networking, big data and artificial intelligence.

Reporting by Sijia Jiang; Editing by Edwina Gibbs

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AI Research Is in Desperate Need of an Ethical Watchdog

About a week ago, Stanford University researchers (posted online)[https://osf.io/zn79k/] a study on the latest dystopian AI: They’d made a machine learning algorithm that essentially works as gaydar. After training the algorithm with tens of thousands of photographs from a dating site, the algorithm could, for example, guess if a white man in a photograph was gay with 81 percent accuracy. The researchers’ motives? They wanted to protect gay people. “[Our] findings expose a threat to the privacy and safety of gay men and women,” wrote Michal Kosinski and Yilun Wang in the paper. They built the bomb so they could alert the public about its dangers.

Alas, their good intentions fell on deaf ears. In a joint statement, LGBT advocacy groups Human Rights Campaign and GLAAD condemned the work, writing that the researchers had built a tool based on “junk science” that governments could use to identify and persecute gay people. AI expert Kate Crawford of Microsoft Research called it “AI phrenology” on Twitter. The American Psychological Association, whose journal was readying their work for publication, now says the study is under “ethical review.” Kosinski has received e-mail death threats.

But the controversy illuminates a problem in AI bigger than any single algorithm. More social scientists are using AI intending to solve society’s ills, but they don’t have clear ethical guidelines to prevent them from accidentally harming people, says ethicist Jake Metcalf of Data and Society. “There aren’t consistent standards or transparent review practices,” he says. The guidelines governing social experiments are outdated and often irrelevant—meaning researchers have to make ad hoc rules as they go.

Right now, if government-funded scientists want to research humans for a study, the law requires them to get the approval of an ethics committee known as an institutional review board, or IRB. Stanford’s review board approved Kosinski and Wang’s study. But these boards use rules developed 40 years ago for protecting people during real-life interactions, such as drawing blood or conducting interviews. “The regulations were designed for a very specific type of research harm and a specific set of research methods that simply don’t hold for data science,” says Metcalf.

For example, if you merely use a database without interacting with real humans for a study, it’s not clear that you have to consult a review board at all. Review boards aren’t allowed to evaluate a study based on its potential social consequences. “The vast, vast, vast majority of what we call ‘big data’ research does not fall under the purview of federal regulations,” says Metcalf.

So researchers have to take ethics into their own hands. Take a recent example: Last month, researchers affiliated with Stony Brook University and several major internet companies released a free app, a machine learning algorithm that guesses ethnicity and nationality from a name to about 80 percent accuracy. They trained the algorithm using millions of names from Twitter and from e-mail contact lists provided by an undisclosed company—and they didn’t have to go through a university review board to make the app.

The app, called NamePrism, allows you to analyze millions of names at a time to look for society-level trends. Stony Brook computer scientist Steven Skiena, who used to work for the undisclosed company, says you could use it to track the hiring tendencies in swaths of industry. “The purpose of this tool is to identify and prevent discrimination,” says Skiena.

Skiena’s team wants academics and non-commercial researchers to use NamePrism. (They don’t get commercial funding to support the app’s server, although their team includes researchers affiliated with Amazon, Yahoo, Verizon, and NEC.) Psychologist Sean Young, who heads University of California’s Institute for Prediction Technology and is unaffiliated with NamePrism, says he could see himself using the app in HIV prevention research to efficiently target and help high-risk groups, such as minority men who have sex with men.

But ultimately, NamePrism is just a tool, and it’s up to users how they wield it. “You can use a hammer to build a house or break a house,” says sociologist Matthew Salganik of Princeton University and the author of Bit by Bit: Social Research In The Digital Age. “You could use this tool to help potentially identify discrimination. But you could also use this tool to discriminate.”

Skiena’s group considered possible abuse before they released the app. But without having to go through a university IRB, they came up with their own safeguards. On the website, anonymous users can test no more than a thousand names per hour, and Skiena says they would restrict users further if necessary. Researchers who want to use the app for large-scale studies have to ask for permission from Skiena. He describes the approval process as “fairly ad hoc.” He has refused access to businesses and accepted applications from academics affiliated with established institutions who have proposed “what seem to be reasonable topics of study.” He also points out that names are public data.

The group also went through an ethics review at the company that provided training list of names, although Metcalf says that an evaluation at a private company is the “weakest level of review that they could do.” That’s because the law does not require companies to follow the same regulations as publicly-funded research. “It’s not transparent at all to you or me how [the evaluation] was made, and whether it’s trustworthy,” Metcalf says.

But the problem isn’t about NamePrism. “This tool by itself is not likely to cause a lot of harm,” says Metcalf. In fact, NamePrism could do a lot of good. Instead, the problem is the broken ethical system around it. AI researchers—sometimes with the noblest of intentions—don’t have clear standards for preventing potential harms. “It’s not very sexy,” says Metcalf. “There’s no Skynet or Terminator in that narrative.”

Metcalf, along with researchers from six other institutions, has recently formed a group called Pervade to try to mend the system. This summer, they received a three million dollar grant from the National Science Foundation, and over the next four years, Pervade wants to put together a clearer ethical process for big data research that both universities and companies could use. “Our goal is to figure out, what regulations are actually helpful?” he says. But before then, we’ll be relying on the kindness—and foresight—of strangers.

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Uber faces big jump in fees if London license is renewed

LONDON (Reuters) – Uber will face a big jump in the fee it pays to operate in London to 2.9 million pounds if the ride hailing company is granted a new license by the city’s transport authority.

Transport for London said on Monday companies with more than 10,000 vehicles would pay 2.9 million pounds ($ 4 million) for a license under a new multi-tiered system coming into force this week.

In 2012, Uber paid less than 3,000 pounds for a five-year license to operate in London, which was extended in May by four months partly because TfL needed to finalize its new fees system.

Uber, which allows users to book journeys on their smartphones, has roughly 40,000 drivers in London. A decision on Uber’s license is due by the end of the month.

TfL’s General Manager of Taxi & Private Hire Helen Chapman said: “There has been a huge growth in the industry in recent years and it is only fair that the license fee reflects the costs of regulation and enforcement.”

“The changes to fees will help us fund additional compliance officers who do a crucial job cracking down on illegal and dangerous activity,” she said.

Uber has previously said it backed the principle of large firms paying more. The company declined to comment on Monday on the license fees.

The number of private hire drivers in London has almost doubled to more than 116,000 from 65,000 in 2013/14, prompting TfL’s decision to introduce higher fees for the bigger operators.

Uber has faced protests from drivers of London’s traditional black cabs and criticism over working conditions.

Several British lawmakers wrote a letter last week calling for Uber’s license not to be renewed, accusing it of not being a “fit and proper operator” and criticizing its record on safety and working rights.

The GMB union handed in a petition with 100,000 signatures on Monday to TfL, calling on Uber to improve workers’ rights or “get out of London” ahead of the license decision.

An Uber spokesman said the company was taking steps to improve security for its drivers and that they are paid more than the minimum wage, enjoying the flexibility offered by the app.

Reporting by Costas Pitas. Editing by Jane Merriman

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