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12 Sep, 2020 11:21

Spain sends message to tech giants like Facebook & Google by seeking new way to tax texting apps

Spain sends message to tech giants like Facebook & Google by seeking new way to tax texting apps

The Spanish government has come up with a new way of taxing tech giants by seeking to classify the likes of Facebook, Telegram, and Google’s parent company, Alphabet, as telecom providers.

Telecommunications Secretary Roberto Sanchez introduced a new bill on Friday, requiring all companies providing telecommunications services to register as telecommunications operators – even if they do not provide any phone numbers.

The legislation is set to go through public hearing and get parliamentary approval, and is not expected to be finalized until the end of the year. If Madrid proceeds with the initiative, Big Tech companies would have to pay the same fee – €1 for every €1,000 in gross revenue – as traditional carriers, if their annual operating income in the country exceeds €1 million. They will therefore have to disclose their sales from messaging services in the country.

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While Sanchez reportedly said that the measure does not target any particular company, the law is likely to affect services such as WhatApp, Telegram and Google’s Hangouts, which people are using more and more instead of usual calls and old-school SMS texts.

An industry consultant told Bloomberg that tech titans like Google and Facebook have long benefited from a lack of regulations. According to Chetan Sharma, those companies “obviously want free rein as any form of regulation makes them accountable, which could lead to fines in case of non-compliance.”

The measure could turn out to be hard to implement, however, given that apps like WhatsApp – one of the world’s most popular messaging services – does not generate much money for its owner Facebook. The US tech giant acquired the messenger in 2014 for a whopping $19 billion.

While the services are mostly free for now, this may not last forever, the Spanish minister noted, stressing that it is vital to incorporate those new “operators” into the regulations as soon as possible. Notably, Facebook has long been considering plans to monetize WhatsApp – from now-abandoned advertisement initiatives to getting fees from in-app payments.

The proposed tax is in line with a broader European initiative to charge American internet giants for revenues generated locally. Spain has already drafted a three-percent tax for firms such as Facebook, Alphabet, Apple and Amazon. The levy will not be implemented until December, when members of the Organization for Economic Cooperation and Development (OECD) are expected to reach an agreement on a joint tech tax.

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