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Commercial Awareness Update - July 2019!
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<blockquote data-quote="Bugsy Malone" data-source="post: 12030" data-attributes="member: 201"><p><strong>3. <u>France’s Digital Tax (by [USER=1]@Jaysen[/USER])</u></strong></p><p></p><p><strong>The Story</strong></p><p><strong></strong></p><p>Last Thursday, French lawmakers approved a digital services tax, which will apply a 3% tax on large digital companies in France.</p><p></p><p>The tax will affect about 30 companies, including US tech giants Google, Amazon and Facebook, which generate over €750m in annual global revenues including at least €25m in France.</p><p></p><p>Ahead of its passage, the US announced a Section 301 investigation to determine whether the tax proposal unfairly targets US companies. The last time the US initiated such an investigation was just before it imposed tariffs on Chinese goods.</p><p></p><p><strong>Impact on Businesses and Law Firms</strong></p><p></p><p>Many EU states believe the existing rules governing corporate tax are outdated. Tech giants like Google, Facebook and Amazon have taken advantage of the fact that the tax rules were originally designed to govern physical assets, and for years they’ve shifted around profits to pay little tax where they operate.</p><p></p><p>However, the EU has been unable to unanimously agree on a new digital tax, leading to countries like France, Spain and the UK to propose their own tax measures. These states believe the tax system should reflect the fact that digital companies generate value from their users’ data (such as through targeted advertising) and not just where their products are created and designed.</p><p></p><p>Under the Section 301 investigation, the US has between 12 to 18 months to come to an agreement with France over how US tech companies are taxed, otherwise the president can decide to impose tariffs. France has already stated the digital tax will be withdrawn if there is international agreement over how to tax companies in the new digital age.</p><p></p><p>Unlike in the dispute with China, there is an incentive for the US to stay at the table this time. The US will want to avoid a situation where more countries begin introducing their own taxation rules, which could lead to a complex series of taxes imposed on digital companies.</p><p></p><p></p><p><strong>4. <u>British Airways fined a record £183 million under new GDPR (by Flora)</u></strong></p><p></p><p><strong>The story:</strong></p><p></p><p>Last week British Airways (BA) was fined £183 million for its breach of security systems last September. The personal details of 500,000 BA customers were collected.</p><p></p><p>This is by far the largest data breach fine and the first to be recorded under the new General Data Protection Regulation (GDPR). The GDPR increased the maximum penalty for data breaches to 4% of a company’s turnover. BA’s penalty amounts to 1.5% of its worldwide turnover in 2017.</p><p></p><p><strong>The impact on business and law firms:</strong></p><p></p><p>The significant fine shows companies must invest in the services they use, as regulators are not afraid to use their new powers to impose severe financial punishments. This will be a huge wake up call to owners of websites that collect personal and credit card data, not only in the UK but also in the EU.</p><p></p><p>Investment in cyber security will now have a more tangible impact on companies’ bottom line results. Investors will be looking at companies’ customer security more seriously before investing as receiving the maximum GDPR fine could risk insolvency.</p><p></p><p>Litigation is likely to follow this fine as BA has suggested it will be appealing. Law firm SPG Law has also threatened a £500 million class-action lawsuit for non-material damage under the Data Protection Act 2018 (the UK’s implementation of GDPR). This could set precedent for future GDPR fines. Law firms will need to pay close attention as this story develops in order to help clients navigate through these new rules.</p><p></p><p></p><p><strong>5. <u>Ford and Volkswagen’s Billion Pound Alliance (by [USER=1550]@Sairah[/USER])</u></strong></p><p></p><p><strong>The Story:</strong></p><p></p><p>Last Friday, two of the world’s biggest car makers, Volkswagen and Ford announced the expansion of their global alliance, to include autonomous and electric vehicles. The alliance will enable both companies to share investments in vehicle architectures in an attempt to reduce costs on new technologies. As part of the deal, Volkswagen will invest $2.6 billion ($1 billion in cash and $1.6 billion in assets) into Argo AI, an autonomous tech startup backed by Ford. Meanwhile, Ford will gain access to Volkswagen’s electric-vehicle MEB platform, a car production system which Volkswagen has invested around $7 billion in since 2016. Ford plans to use the platform to design and build at least one high-volume vehicle in Europe starting in 2023. Ford also aims to deliver more than 600,000 European vehicles using the MEB platform over the course of six years.</p><p></p><p>Despite both car companies sharing the considerable research and development costs associated with commercialising the technologies. Ford and Volkswagen announced they will “remain independent and fiercely competitive” in the car market. This means the alliance will not entail cross-ownership, the two car makers will have separate autonomous-vehicle businesses under the deal, but both will use Argo’s software.</p><p></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>Many car companies are racing to build on Tesla’s success, which was the first high-profile car maker to commercialise electric and self-driving vehicles on the roads. Self-driving cars have the potential to eliminate emissions and avoid accidents caused by human error. But, a shift towards these technologies could be detrimental for established traditional automakers like Ford and Volkswagen. This is because they will need to invest billions in the coming years or risk becoming irrelevant. Also, they face new competitors like Uber with access to larger financial resources and deep-pocketed tech companies such as Apple, who last month purchased the self-driving tech startup, Drive.ai.</p><p></p><p>In the past month investors have viewed Volkswagen and Ford’s plans as negative, with ‘no merit’, as they were hoping for more dramatic action. This is because auto investors fear threats from rich high-technology companies threatening to catch market share, as consumers start to avoid traditional car ownerships and instead embrace new methods of transportation like car sharing, electric and autonomous cars. At the same time, car sales are starting to fall in all of the largest markets, such as China and the UK, pinching the automakers financially. With this in mind investors are more willing to back Silicon Valley companies like Apple or Google.</p></blockquote><p></p>
[QUOTE="Bugsy Malone, post: 12030, member: 201"] [B]3. [U]France’s Digital Tax (by [USER=1]@Jaysen[/USER])[/U][/B] [B]The Story [/B] Last Thursday, French lawmakers approved a digital services tax, which will apply a 3% tax on large digital companies in France. The tax will affect about 30 companies, including US tech giants Google, Amazon and Facebook, which generate over €750m in annual global revenues including at least €25m in France. Ahead of its passage, the US announced a Section 301 investigation to determine whether the tax proposal unfairly targets US companies. The last time the US initiated such an investigation was just before it imposed tariffs on Chinese goods. [B]Impact on Businesses and Law Firms[/B] Many EU states believe the existing rules governing corporate tax are outdated. Tech giants like Google, Facebook and Amazon have taken advantage of the fact that the tax rules were originally designed to govern physical assets, and for years they’ve shifted around profits to pay little tax where they operate. However, the EU has been unable to unanimously agree on a new digital tax, leading to countries like France, Spain and the UK to propose their own tax measures. These states believe the tax system should reflect the fact that digital companies generate value from their users’ data (such as through targeted advertising) and not just where their products are created and designed. Under the Section 301 investigation, the US has between 12 to 18 months to come to an agreement with France over how US tech companies are taxed, otherwise the president can decide to impose tariffs. France has already stated the digital tax will be withdrawn if there is international agreement over how to tax companies in the new digital age. Unlike in the dispute with China, there is an incentive for the US to stay at the table this time. The US will want to avoid a situation where more countries begin introducing their own taxation rules, which could lead to a complex series of taxes imposed on digital companies. [B]4. [U]British Airways fined a record £183 million under new GDPR (by Flora)[/U][/B] [B]The story:[/B] Last week British Airways (BA) was fined £183 million for its breach of security systems last September. The personal details of 500,000 BA customers were collected. This is by far the largest data breach fine and the first to be recorded under the new General Data Protection Regulation (GDPR). The GDPR increased the maximum penalty for data breaches to 4% of a company’s turnover. BA’s penalty amounts to 1.5% of its worldwide turnover in 2017. [B]The impact on business and law firms:[/B] The significant fine shows companies must invest in the services they use, as regulators are not afraid to use their new powers to impose severe financial punishments. This will be a huge wake up call to owners of websites that collect personal and credit card data, not only in the UK but also in the EU. Investment in cyber security will now have a more tangible impact on companies’ bottom line results. Investors will be looking at companies’ customer security more seriously before investing as receiving the maximum GDPR fine could risk insolvency. Litigation is likely to follow this fine as BA has suggested it will be appealing. Law firm SPG Law has also threatened a £500 million class-action lawsuit for non-material damage under the Data Protection Act 2018 (the UK’s implementation of GDPR). This could set precedent for future GDPR fines. Law firms will need to pay close attention as this story develops in order to help clients navigate through these new rules. [B]5. [U]Ford and Volkswagen’s Billion Pound Alliance (by [USER=1550]@Sairah[/USER])[/U][/B] [B]The Story:[/B] Last Friday, two of the world’s biggest car makers, Volkswagen and Ford announced the expansion of their global alliance, to include autonomous and electric vehicles. The alliance will enable both companies to share investments in vehicle architectures in an attempt to reduce costs on new technologies. As part of the deal, Volkswagen will invest $2.6 billion ($1 billion in cash and $1.6 billion in assets) into Argo AI, an autonomous tech startup backed by Ford. Meanwhile, Ford will gain access to Volkswagen’s electric-vehicle MEB platform, a car production system which Volkswagen has invested around $7 billion in since 2016. Ford plans to use the platform to design and build at least one high-volume vehicle in Europe starting in 2023. Ford also aims to deliver more than 600,000 European vehicles using the MEB platform over the course of six years. Despite both car companies sharing the considerable research and development costs associated with commercialising the technologies. Ford and Volkswagen announced they will “remain independent and fiercely competitive” in the car market. This means the alliance will not entail cross-ownership, the two car makers will have separate autonomous-vehicle businesses under the deal, but both will use Argo’s software. [B]Impact on Businesses and Law Firms:[/B] Many car companies are racing to build on Tesla’s success, which was the first high-profile car maker to commercialise electric and self-driving vehicles on the roads. Self-driving cars have the potential to eliminate emissions and avoid accidents caused by human error. But, a shift towards these technologies could be detrimental for established traditional automakers like Ford and Volkswagen. This is because they will need to invest billions in the coming years or risk becoming irrelevant. Also, they face new competitors like Uber with access to larger financial resources and deep-pocketed tech companies such as Apple, who last month purchased the self-driving tech startup, Drive.ai. In the past month investors have viewed Volkswagen and Ford’s plans as negative, with ‘no merit’, as they were hoping for more dramatic action. This is because auto investors fear threats from rich high-technology companies threatening to catch market share, as consumers start to avoid traditional car ownerships and instead embrace new methods of transportation like car sharing, electric and autonomous cars. At the same time, car sales are starting to fall in all of the largest markets, such as China and the UK, pinching the automakers financially. With this in mind investors are more willing to back Silicon Valley companies like Apple or Google. [/QUOTE]
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