Microsoft has found a unique way to attack their rivals – by being a good corporate citizen and shaming companies like Apple and Amazon.
The biggest threat against major internet companies in 2019 has been increased regulatory scrutiny by governments led by growing public sentiment that large companies are not acting in the interest of the population, in particular by not paying taxes on their massive profits.
Microsoft has managed to avoid much of the opprobrium directed at Amazon, Facebook, Google and Apple, despite in fact being the most valued company in the world, by aligning themselves closely with government interests, for example showing strong support for the Pentagon’s modernization program while Google acceded to demands by employees to keep their tech away from the military.
Now Microsoft’s President Brad Smith addressed the second issue in a recent Op-Ed in The Seattle Times where he agreed to a scheme which would have Microsoft and crucially Amazon pay a top end of 67% corporate state tax in Seattle.
The op-ed was in response to a proposal by Rep. Drew Hansen, D-Bainbridge Island and Rep. Gerry Pollet, D-Seattle, to create a $1 billion “workforce education account” to spend on financial aid for students in high-demand subjects such as computer science, engineering and nursing, paid for by a progressive tax on large companies.
The bill suggests increasing the state business and occupation tax by 20 percent on about 40 categories of technical services, such as telecom, engineering, medical and finance and by 33 percent on tech firms with more than $25 billion in annual revenue. It also adds a massive 67 percent business tax increase, for those “advanced computing businesses” with “worldwide gross revenue of more than one hundred billion dollars” per year.
The only two companies who meet that high bar in the region is Amazon and Microsoft, and Brad Smith is only too happy to pay their share.
“Let’s ask the largest companies in the tech sector, which are the largest employers of high-skilled talent, to do a bit more,” Microsoft President Brad Smith wrote about this idea.
Amazon was less enthused.
“Amazon was surprised to be included in such a public ‘hey, let’s do this’ by Microsoft,” said Rep. Gael Tarleton, D-Seattle, who said she heard that lament directly from an Amazon lobbyist.
With annual revenue in the hundreds of billions and state taxes a small fraction of this Microsoft is unlikely to miss a few hundred million spent on improving their relationships with the community. Amazon, who already has a fractious relationship with the government, partly due to the feud between Donald Trump and Jeff Bezos, is however expected to be less generous and fight the proposal, which will not help Democratic calls to break the company and others tech giants (the list which interestingly excludes Microsoft) up.
Maybe under Nadella Microsoft has had its “Road to Damascus” moment, or maybe Satya Nadella is just a lot smarter than we give him credit for.
Via Seattle Times