RIDING THE DIGITAL LOOPHOLES

They say the only things you can rely on are death and taxes. But some of the global tech companies seem to have done a good job removing one of those certainties (and, if Peter Thiel’s vampire scheme works, maybe they’ll figure out how to avoid the other one too).

In the past, businesses seemed to understand they played an important role in society as a whole. But, increasingly, the main motivation of modern businesses seems to be creating shareholder value above all else. Large tech companies stretching their digital tentacles all over the globe isn’t exactly new – after all, IBM alone has operations in more than 170 countries, and has been a global presence for decades. But governments are struggling to figure out how exactly to regulate global digital behemoths like Google, Facebook, Apple, Airbnb and Uber.

Regulation has always struggled to keep up with technology. And companies that offer customers

what they want, rather than heed existing regulations that are often designed to protect incumbents, eventually tend to win. But while global companies offer such good consumer services, they’re also good at finding ways to get around their duties as corporate citizens and help fund the societies they operate in.

For many individuals, the services that many of these companies offer – often for free, in exchange for handing over data – are quite valuable. And from the companies’ perspective, their goal is to minimise cost. So, when it comes to tax, funneling revenue through foreign countries with lenient laws makes sense and, in most cases, is still legal. But, in the eyes of local businesses, it’s not ethical and it’s not a level playing field.

Spark managing director Simon Moutter has been outspoken on the matter and says overseas companies need to pay their fair share of tax. As he wrote in The New Zealand Herald in June: “I’ve consistently called on our Government to take more progressive action and lead the way on ending the tax dodging, as has already happened in the United Kingdom and Australia. There is no law that forces them to operate with thinly capitalised local companies, to route revenue through offshore entities, or to have massive levels of intercompany expenses to reduce their taxable profits in New Zealand. They make a considered choice when they use such tactics to avoid paying tax here.”

Xero, one of New Zealand’s biggest startup success stories, is far more internationally focused than Spark, so CEO Rod Drury is less outspoken on the matter. But he does say there’s a real danger of these huge tech companies becoming so large that they’ll be impossible to regulate.

“The bigger issue 30 years out, like an Arnold Schwarzenegger movie, is you’ll have very large companies controlling very large revenue streams,” he says. “You’re already seeing that a bit with Google and Apple.”

One of the running jokes in the HBO show Silicon Valley is that the founders are making the world a better place. But the real Silicon Valley doesn’t seem to be doing a very good job of that, because, while the democratisation of tech is meant to be removing barriers, in many cases it seems to be having the opposite effect.

The diversity issue among the world’s biggest tech companies – put simply: a lot more men than women, very few women in leadership positions, and a lack of ethnic minorities – has been discussed often and many of these companies have committed to releasing regular diversity reports.

Publicly, there seems to be a willingness to address the issue. But there are also plenty of stories about entrenched bad behaviour inside tech companies, as well as from CEOs and investors.

Take Uber, for example. CEO Travis Kalanick recently stepped down amid an investigation into the company’s culture of harassment (and while the company proudly promotes itself as an example of the “gig economy”, it has also come under fire for exploiting workers’ rights).

A recent New York Times piece detailed the sexual harassment several female tech entrepreneurs faced from prominent venture capitalists in Silicon Valley as they attempted to raise money. And, as Buzzfeed’s Doree Shafrir reported in early July, women working in VR say they’ve faced pervasive discrimination and harassment at Silicon Valley companies.

As one anonymous woman in Shafrir’s story said: “I love VR for its potential, but these fucking man-babies are ruining it.”

In February, Magic Leap was sued by its former vice president of strategic marketing and brand identity, who said she was fired after repeatedly trying to correct the company’s gender imbalance and hostility towards women. The lawsuit quotes an IT support lead who allegedly said the following: “We have a saying; stay away from the Three Os: Orientals, Old People and Ovaries.”

This lack of diversity isn’t limited to technology, of course. It’s a broader business issue and, speaking with

Idealog on International Women’s Day, Xero managing director Anna Curzon said the fact that there was no female CEO leading an NZX 50 company until Kate McKenzie took over as CEO of Chorus this year was unacceptable.

“There is more than enough evidence and research available to show that diversity in leadership teams and boards drive better outcomes and performance of the business. In my experience, change is CEO-led. A focus on diversity needs to filter down through the business from the top down, so that it’s palpable within the culture of the company.”

Curzon says addressing issues of diversity and equality is not only the right thing to do. It’s also the smart thing to do.

“It has a huge impact on the health and wealth of our economy in New Zealand. If it makes it easier, think about diversity as a key way to grow GDP. But know that all businesses in New Zealand need to be better at reflecting the customers and communities they serve, because all the evidence says this will lead to better business outcomes.”