A 2-post collection

Taxing data

Recently Google has made a large push towards their photo sharing app, Google Photos. Offering unlimited high-resolution storage for anyone who buys a Pixel phone, and standard resolution for anyone who signs up, it seems like a deal too good to be true. Whilst signing up is easy, removing yourself from the service (as I tried to do a few months ago) is much harder. Photos can only be deleted in batches of 500, and the process will fail four out of five times. It’s the sort of dark user experience that you can see in other products, but it is a reminder of an important point: Google is a data collection company, and its value is dependent upon the quantity and quality of data that it can collect.

The problem with taxing technology

Historically tax has been used to collect revenue for the state by extracting a proportion of the value that businesses or individuals create. Taxation from Biblical times is described as

"When the crop comes in, give a fifth of it to Pharaoh.

Genesis, Chapter 47, verse 24

In this case, the taxation system is quite simple: whatever value you create (i.e crops), give 20% of it to the Pharaoh. Since biblical times this principle of extracting value from producers has been extended to value added tax (VAT), where every transaction that creates some element of value is taxed at a percentage. The bottom line of a capitalist taxation system is that where value is created it is only fair to take a proportion of that transaction as tax.

When it comes to technology companies, the value almost always sits in the data that they own. Citymapper, a UK based transport company is valued at over £250 million, despite the fact that it doesn’t make a profit. What it does have, though, is huge amounts of data about transport patterns in cities all over the world - often much more accurate data that municipal transport companies themselves have access too. It’s a similar story with Uber, which recently launched Uber Movement, a service demonstrating just how valuable their data collection of journey times has been.

Citymapper recently launched a pop-up bus service to demonstrate the power of the data they have access to

The issue with taxing these companies is that though an organisation like Citymapper is generating substantial value with the data that it’s collecting, there is no concrete monetary figure associated with it. Therefore, for most fast-growing startups the core of their value goes completely untaxed.

Where value goes, tax should follow

Over the past few years, the regulation on the collection and processing of data has become stricter. In order to collect data of any kind in the UK, you need to register with the ICO, and soon companies will have to comply with strict security legislation brought about by GDPR. Despite this regulation of data, though, there has been absolutely no attempt to tax the collection or processing of data.

Google’s search algorithm is improved with every search that is made. Though there is a monetary cost of providing the service, the benefit of having the most predictive algorithm is clear to be seen. Terms of service across any tech company that you care to mention includes clauses about using consumer data to improve the service for others. This may seem like an altruistic motivation, but in reality, it is anything but. Taking the insights from Google search and integrating it into Google Home, for example, allows Google to create a much more valuable product. Again, this value is completely untaxed.

Government & regulators are unprepared

The shape of the global economy has been dramatically transformed by technology, and yet the regulatory and taxation system has remained relatively static. As technology companies experiment with new ways to create value it’s the responsibility of government to experiment with new ways of taxing them. Sadly the exact opposite has happened. HMRC recently removed the flat rate VAT scheme benefit for what they call “limited cost business.” Typically these businesses are tech companies whose only capital expenditure are laptops at the beginning of the year. From then on they operate with limited costs - but this doesn’t mean that they’re not creating value.

Simply closing the option for companies to claim back flat rate VAT doesn’t solve the problem, it only seeks to demonstrate the difficulties of creating a fair taxation system where most of the value is invisible when measured with traditional metrics. We need a radical rethink of the way that value is measured and tax is administered, and this has to start with a technology first approach.


Too much content, not enough curation

Why online education is failing

Every school or university has a library. Some universities have dozens of libraries. Everyone recognises, though, that simply having access to information stored in a library is not enough to give someone a good education. Teachers in schools and universities guide, curate and inspire students to find the right information and to present it back in a coherent fashion. Teaching a way of thinking, rather than just studying facts, gives students the ability to learn for themselves and become adaptable and critical of new knowledge and ideas. With no guidance, the only way of studying books becomes to start at “A” and work your way through to “Z”.

A university with no teachers

Technology gives anyone with an internet connection free access to information. The Web contains more content than any library, and more information than any single human being could ever know. Yet like a university with no teachers, there is no one to guide or curate this content. For people who want an education, there is a core component of knowledge missing from the web: how to learn. For those who know how to find relevant information online and utilise it, the web can play an important role in educating and improving their intellectual capital. But there is a key precondition: knowing where to look.

Open source teaching

To counteract this problem many universities are now opening up their courses to outside observers. What used to be restricted to a privileged few is now available for the masses. Want to learn about photography? Take a free course from Harvard. Need to brush up on Philosophy? Go to Edinburgh University’s website. Although these courses are free, they ironically ignore what is best about the web: that a lot of the content and information is out there already. Rather than recreating much of the content that has been developed already, a teacher might just select the best resources relevant for the student. Teaching a way of thinking is not teaching the facts.

A new model

What does a teacher fundamentally do? They help you achieve goals; developing your way of thinking and challenging you. Content alone can’t do this, yet technology might be able to. Developing responsive and personalised challenges and tasks could help a student to reach their goals in a scaled and open way. Importantly, the learning is goal focussed, allowing someone to apply their knowledge to a new job or opportunity. Though someone may not know what they need to learn, they will certainly know where they want to get to in life. In this way curation on the web could help them get there; turning the content on the web to good use and democratising the knowledge for people who don't know where to start.