Dangerous Cloud Act Legislation Appears in Congress

The Cloud Act would allow for dangerous violations of consumer privacy rights through abusing the stored data corporations have on people. U.S. citizens, I encourage you to oppose this type of legislation. Privacy rights are going to become much more important in the next several years ahead as more and more of society is effused with technological infrastructure.

Civil libertarians and digital rights advocates are alarmed about an “insidious” and “dangerous” piece of federal legislation that the ACLU warns “threatens activists abroad, individuals here in the U.S., and would empower Attorney General Sessions in new disturbing ways.”

The Clarifying Lawful Overseas Use of Data or CLOUD Act (S. 2383 and H.R. 4943), as David Ruiz at Electronic Fronteir Foundation (EFF) explains, would establish a “new backdoor for cross-border data [that] mirrors another backdoor under Section 702 of the FISA Amendments Act, an invasive NSA surveillance authority for foreign intelligence gathering” recently reauthorized by Congress.

Ruiz outlines how the legislation would enable U.S. authorities to bypass Fourth Amendment rights to obtain Americans’ data and use it against them:

The CLOUD Act allows the president to enter an executive agreement with a foreign nation known for human rights abuses. Using its CLOUD Act powers, police from that nation inevitably will collect Americans’ communications. They can share the content of those communications with the U.S. government under the flawed “significant harm” test. The U.S. government can use that content against these Americans. A judge need not approve the data collection before it is carried out. At no point need probable cause be shown. At no point need a search warrant be obtained.

The EFF and ACLU are among two dozen groups that banded together earlier this month to pen a letter to Congress to express alarm that the bill “fails to protect the rights of Americans and individuals abroad, and would put too much authority in the hands of the executive branch with few mechanisms to prevent abuse.”

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“This controversial legislation would be a poison pill for the omnibus spending bill,” declared Fight for the Future’s deputy director, Evan Greer. “Decisions like this requires rigorous examination and public debate, now more than ever, and should not be made behind closed doors as part of back room Congressional deals.”

The group also pointed out that big tech companies such as Apple, Facebook, and Google are among those lobbying lawmakers to include the CLOUD Act in the spending bill:

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Google “Dutch Sandwich” Tax Shelter Shielded $19.2 Billion in Taxes

The big tech companies generally aren’t criticized enough, and that’s despite the immense power that they wield. The Lupe Fiasco quote of “You should criticize power even if you agree with it” comes to mind and is thought-provoking.

Alphabet Inc.’s Google moved 15.9 billion euros ($19.2 billion) to a Bermuda shell company in 2016, regulatory filings in the Netherlands show — saving the company billions of dollars in taxes that year.

Google uses two structures, known as a “Double Irish” and a “Dutch Sandwich,” to shield the majority of its international profits from taxation. The setup involves shifting revenue from one Irish subsidiary to a Dutch company with no employees, and then on to a Bermuda mailbox owned by another Ireland-registered company.

The amount of money Google moved through this tax structure in 2016 was 7 percent higher than the year before, according to company filings with the Dutch Chamber of Commerce dated Dec. 22 and which were made available online Tuesday. News of the filings was first reported by the Dutch newspaper Het Financieele Dagblad.

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The Irish government closed the tax loophole that permitted “Double Irish” tax arrangements in 2015. But companies already using the structure are allowed to continue employing it until the end of 2020.

According to U.S. financial filings, Google’s global effective tax rate in 2016 was 19.3 percent, which it achieved in part by shifting the majority of its international profit to the Bermuda-based entity. Applying that tax rate, Google would have saved $3.7 billion via the 2016 transfer.

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For years, U.S. tax law has given American companies an incentive to keep their foreign earnings offshore by allowing them to defer U.S. taxes until they return those profits to the U.S. But that changes this year; the U.S. tax law passed last month will require companies to pay taxes on the overseas income they’ve stockpiled to date at one of two rates: 15.5 percent for income held as cash or cash equivalents and 8 percent for less liquid assets.

Going forward, U.S. companies that pay relatively low global effective tax rates — a sign that they’re using tax havens — would pay a minimum U.S. tax. That new tax, which begins at a rate of 10.5 percent, wouldn’t apply in cases where a company’s global effective tax rate is 13.125 percent or higher.

Google Ireland Ltd. collects most of the company’s international advertising revenue and then passes this money on to Dutch subsidiary Google Netherlands Holdings BV. A Google subsidiary in Singapore that collects most of the company’s revenue in the Asia-Pacific region does the same.

The Dutch company then transfers this money on to Google Ireland Holdings Unlimited, which has the right to license the search giant’s intellectual property outside the U.S. That company is based in Bermuda, which has no corporate income tax. The use of the two Irish entities is what gives the structure its “Double Irish” moniker and the use of the Netherlands subsidiary as a conduit between the two Irish companies is the “Dutch Sandwich.”

Also relevant is this article, published in December of last year: Google’s origin is partially based in research grants provided by the NSA and CIA.

Big Tech as the New Predatory Capitalism

Big Tech has become corrupted with the immense power it wields, and there is growing awareness of the side effects of this phenomenon. I am personally a little too pedantic to agree with all of the article here, but it is definitely the type of analysis worth linking to in an era where corporations such as Google and Facebook are largely unregulated monopolies.

The five largest global corporations by market value are the five tech firms named above. Google has near-total dominance of the search market. Facebook welcomes two billion monthly users and manages six of the top ten social media apps globally. Amazon controls nearly half of e-commerce and over two-thirds of the emerging voice-activated digital assistant market. Apple and Google share control of the operating systems for mobile phones and tablet gadgets; add Microsoft and Amazon and you’ve covered virtually all electronic computing devices. Facebook and Google dominate digital advertising. Amazon is increasingly the only player for cloud services.

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The effects of tech monopolization have been detailed, at book length, over the past year (see companion book review essay by K. Sabeel Rahman, page 104). We already know these firms have crippled entrepreneurship, by either buying out competitors or copying their features and using overwhelming market share to destroy them—tactics that would be familiar to the authors of the Sherman and Clayton antitrust acts. We already know they’ve concentrated economic gains in a few small enclaves, leaving large swathes of the country behind. We already know they religiously avoid taxes and cut special deals with intimidated public officials, burdening the rest of society. We already know their surveillance capabilities rival any in history, handing over a comprehensive profile of your every waking moment for advertisers and behaviorists to exploit. We already know the addictive qualities of their products have undermined social relationships, expanded divisiveness, and transformed what it means to be human. We already know their drive for profits ignores how their platforms can be weaponized, scarring millions and undermining democracy.

RNRH: The Existential Threat of Big Tech

The threat that big tech corporations pose is discussed on the recent edition of the Ralph Nader Radio Hour. If the power of these big corporations is left unchecked and is insufficiently opposed, it may lead to a truly dystopian form of society.