France’s internet data tax: AKA why the French can’t have nice things

Sacre bleu! France’s President François Hollande has proposed that companies like Facebook and Google pay taxes for the privilege of collecting French users’ data.

The proposal is part of a report on how the French government can profit from internet companies not subject to high French capital gains, dividend and corporate taxes.

The report tries to justify the tax on data collection by claiming that Google and Facebook’s users are “in effect, working for these companies without pay by providing the personal information that lets them sell advertising.”

This is the pinnacle of French innovation.

This is the pinnacle of French innovation.

Jigga what? Google and Facebook’s users willingly trade their data for services. Taking bits of information rather than dollars from customers doesn’t change the nature of the trade. Secondly, even if users were working for free (which they’re not), but instead exchanging data for services, what business is it of the French government if they do?

The irony here is that the impulse to tax anything remotely innovative or profitable to death is a huge part of the reason France isn’t producing their own Facebooks and Googles. That, plus huge regulatory barriers to entry and the government’s readiness to prop up failing incumbents with subsidies.

The ability to turn data into profit may be the most important innovation we’ve seen in our lifetimes. We’ve given Google and Facebook our information. And what we have gotten in exchange has completely changed life as we know it for the better. Google has absolutely revolutionized the way information is organized. What used to take months is now done in seconds. The wealth created solely through Google’s search algorithm is absolutely incalculable. Facebook similarly has vastly improved the way we connect with each other online. It’s now possible — easy, in fact — to keep up with hundreds of contacts in seconds. All this, plus these companies have made advertising more closely aligned with users’ needs than it’s ever been before.

If you want less of something, tax it. The worst thing the French government could do right now is disincentivize companies’ efforts to turn French data into profit. Here’s hoping they realize this before implementing this boneheaded tax.

Photo by gtrwndr87

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