Ever wonder how social media sites can make so much money without any cost to users? With the explosion of social media membership the companies which control these sites are generating large profits from something that seems “free” to those on the outside. However, sites such as Facebook and Google are able to bring in such profits by tracking the “likes” or searches that take place. They then sell the personal data to other sites and advertisers. This process is quite profitable for the sites, allowing them to generate enormous profits whilst keeping their services free for the users. As of yet there is no tax on the buyers or the sellers of the information.
With the exponentially rising memberships to social media sites and the astounding number of Google searches done each day, France has seen an opportunity. The European country has recently proposed taxing those sites for tracking and gathering the personal data of their users. Though it has yet to be officially decided what the percentage of the tax would be, Nicolas Colin, author of a report on the proposal, claims that the tax would be small at first. The New York Times reports that France has proposed the tax in order to help lessen the country’s budget deficits. France has been striving to find a legitimate way to be able to tax the Internet companies who were making millions and it
seems that this might just be what they were searching for.
The tax is not one-dimensional however, as it also forces Internet companies to become more transparent in their use of personal data. In order to do this, companies that keep track of user’s “cookies” without letting the consumer know exactly how the site would use the collected information, would be taxed. The sites would be able to alert consumers by putting a small disclaimer on the website. Colin claims that the tax is in no way attempting to stop the gathering of personal data, as that does bring in a lot of profit. But it is simply trying to make companies more transparent when dealing with personal information and also to help the government gain from the success of Internet companies within the country.
This tax seems like a very logical idea, giving a bit of the enormous profits dragged in by Internet companies to the government to aid the country with debt problems. However, many companies have already been trying to side step taxation legislation of larger European countries by doing most of their business in other smaller countries, namely Ireland and Luxemburg, which have a smaller tax rate because of their size, says The New York Times. In order for the tax to succeed, it needs to somehow find a way around this.
Will this proposal become a trend, to be repeated in countries like America? But even more, will this affect the cost of social media sites and search engines to users? For now we’ll have to let France to test out the waters.