Online giants face more than just a fair tax responsibility

Sucking the financial life out of journalism is arguably as serious as tax avoidance, writes Raymond Snoddy. So can a proposed levy help save a key facet of modern democracy?

The worms are starting to turn against the great international search and communication engines such as Google and Facebook.

Characteristically the French worms are turning rather more vigorously than the British.

After a six year investigation Her Majesty’s Revenue and Customs retrieved £130 million in back taxes over the past decade after what was called “an open audit” of UK Google revenues that reached £7 billion last year alone.

The French are made of sterner stuff with a raid on Google’s Paris headquarters and a recent threat from the French finance minister Michel Sapin that they would be looking for at least £1.2 billion in corporation tax and VAT on revenues that are a fraction of those in the UK.

Those arguments are about tax and questions of legality and alleged tax avoidance, which may in fact be legal.

The Googles and Facebooks of this world have long faced an allegation that could be just as socially serious as tax minimisation – sucking the financial life out of established media, with a particularly catastrophic effect on local news and long-form and investigative journalism.

Doing something about that destructive disruption is not an issue of legality but one of social responsibility.
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A new essay from the ResPublica by media academic Justin Schlosberg has come up with a neat idea to balance things and counter what could increasingly become a democratic deficit.

Why not have a 1 per cent levy on the revenues of search engines and social media with more than a 25 per cent share of their market to help fund journalism in the public interest?

Google has 90 per cent of the UK search engine market, according to Schlosberg, which is as close to the most commercial monopoly you will ever see. Facebook has an 80 per cent share of the UK social media market.

The question and the argument go like this. How do you regulate concentrations of media power in a post-digital age and how do you create more “virtuous media markets” in the UK and the rest of Europe – markets that serve to inform, defend and represent citizens.

Without something like a 1 per cent levy, which would raise something like £70 million a year, it is difficult to see how such a thing could happen.

Schlosberg believes, unsurprisingly, that the future financial prospects for local and long-form journalism “looks grim” and there has also been a sustained long-term decline in current affairs spending in television.

Google and Facebook benefit greatly from news content that they pick up and distribute, the essay argues, though publishers also get increased visibility as a result.

“Although Google, for instance does not profit directly from news content, it forms an integral part of its user experience and volume base, and thus contributes substantially to the company’s bottom line,” Schlosberg argues.

Much of the revenues, including Facebook’s £104 million of UK revenues in 2014 come from advertisers who used to support news publishers more extensively in the past.

How would a levy work, who would the money go to, and who would distribute it?

There are collaborative journalist organisations already in place such as The Center for Public Integrity in the US, the Bureau of Investigative Journalism in the UK, Netzwerke Recherche in Germany and Chiarlettere in Italy.

In the UK context the money could be awarded in open competition by a Media Plurality Board operating under the general auspices of Ofcom – what a busy regulator that body will be in future – or even attached to arts councils.

Obviously such a plan would face considerable practical problems. Could established media organisations, many of which are still profitable through the device of shedding journalists, apply for subsidy or get long form investigations for free to publish in their own papers?

A much bigger problem might be persuading the multi-media giants to give away a meaningful slice of their revenues in the first place. What if they just said: “No,” and they probably would.

International action would almost certainly work much better than trying to get individual national deals and this could be a case for the much-maligned European Union – if the UK is still a member on 24 June.

The Birkbeck College lecturer also argues for greater independence for the BBC from government and a wider plurality of views by giving individual programmes more freedom through a process of editorial decentralisation.

The lecturer notes international criticism of a new media law in Poland that consolidates the executive’s power of appointments in public broadcasters.

Sounds a bit like Culture Secretary John Whittingdale’s Royal Charter insistence that the government should be able to appoint the chairman and deputy chairman of the BBC plus the national governors for Scotland, Wales, Northern Ireland and England.

“Whilst BBC production must remain not-for-profit and entirely in public hands, decentralisation of both management structure and delivery is essential to ensure more robust independence, genuine accountability, and internal plurality.”

This is unlikely to happen. Editors of individual programmes such as the Today programme and Newsnight have always had a considerable degree of autonomy and it was the lack of an effective centralised structure that enabled the mistakes over the coverage of Savile and Lord McAlpine.

You can have a plurality of views within a large organisation like the BBC but the left hand must know what the right hand is doing.

And to achieve something that the Royal Charter rightly seeks – greater ethnic and gender diversity in both staffing levels and programme output – an element of central control and standard setting is vital

The essay also argues for closer monitoring and greater transparency on meetings between publishers and editors and senior politicians.

It would be nice to know for instance how often Rupert Murdoch, who has argued incessantly for a smaller BBC over the years, has met ministers over the past decade.

Yet such record keeping should not include journalists, as some have argued. That would be a sure way of reducing plurality of information and reducing political journalism to a world of press releases and spin.