Apple’s Tim Cook heads to Brussels to talk privacy amid ongoing tax fight

When Tim Cook shows up in Brussels on Wednesday, the stage will be set for a triumphant return to Europe two years after the Apple CEO clashed with Margrethe Vestager, the EU’s antitrust czar, in the Belgian capital.

Back then, the iPhone maker was the region’s latest tech bad boy after allegedly failing to pay €13.1 billion in taxes due to unfair treatment by the Irish government. Now, it’s Google and Facebook that are squarely in Europe’s regulatory sights — while Cook can tout Apple’s long-standing concern for privacy as badge of honor that sets his company apart, and in some ways above, other Silicon Valley giants.

As Cook gives a keynote speech to many of the world’s data protection regulators gathered in Brussels — a town increasingly at the forefront of the world’s regulation of tech — he is even expected to go so far as to call for a comprehensive U.S. privacy law, according to prepared remarks seen by POLITICO.

“We will never achieve technology’s true potential without the full faith and confidence of the people who use it,” Cook will tell the Brussels audience Wednesday. “We are optimistic about technology’s awesome potential for good. But we know that it won’t happen on its own.”

EU-tax overdrive

And yet, there’s a problem lurking in the background of Cook’s privacy message, which is aligned with Apple’s focus on selling hardware and not on harvesting people’s digital information. The company’s tax woes in Europe have not gone away.

Both Apple and Dublin are appealing the 2016 multibillion-euro tax ruling, and the company refutes allegations that it shirks its obligations, claiming it’s the world’s largest corporate taxpayer. Still, the European Union is not slowing down, with officials now haggling over new digital tax proposals that would force many of Silicon Valley’s biggest names to fork over an even greater slice of their revenue generated inside the 28-member bloc.

Such digital policymaking — seen by its proponents as necessary to rein in tech’s perceived excesses, or as a protectionist grab by its opponents to support Europe’s legacy industries — has made Brussels, more than Washington, the center of the battle over who gets to set the rules of the road for the global digital economy.

With its stance toward privacy and tax, Apple finds itself at the center of this tussle, one that has pitted many of Silicon Valley’s tech giants, let alone national lawmakers, on different sides when it comes to handling people’s data online, paying taxes worldwide and promoting competition across the digital world.

Focus on privacy

Cook’s strategy to focus on privacy is a practical one. Unlike Facebook and Google, whose advertising-based businesses have both been recently hit with scandals over how they handle peoples’ data, Apple has sidestepped much of the recent so-called techlash.

The iPhone maker generates almost all of its income from selling hardware like smartphones and laptops, and so has not fallen into the same privacy-related traps that have engulfed others. Facebook publicly acknowledged this summer that up to 87 million of its users may have had their information illegally handled by Cambridge Analytica, a British data firm.

European Commissioner for Competition Margrethe Vestager | Emmanuel Dunand/AFP via Getty Images

For Apple, whose high-priced gadgets made the Cupertino, California-based company the world’s most valuable firm, a strong stance on data protection — once seen as a topic in which only the most tech-savvy users were interested — has become a strong selling point.

“Apple is a different animal compared to Google’s search engine or a social network,” said Giovanni Buttarelli, the European Data Protection Superviseor, who first met Cook last year in Milan and invited him to speak in Brussels this week. “He will surprise others in the debate around digital ethics.”

Play down tax

Cook is likely to take a lap of honor among global data protection officials who have gathered in Brussels this week.

But the uncomfortable question about how much tax Apple pays worldwide will not be far from the surface — particularly as EU officials move steadily closer to agreeing to new digital taxes aimed mostly at U.S. tech companies.

In announcing the record state-aid tax charge against Apple’s activities in Ireland, Vestager, Europe’s competition czar, accused the company of paying less than a 1 percent corporate tax rate on its European profits in 2014, allegations that Apple vehemently denies. (The company claims its effective global tax rate over the last 10 years is 26 percent).

“A digital tax is coming, like it or not. Fighting it is like trying to keep back the tide” — James Stewart, adjunct associate professor of finance at Trinity College, Dublin

One of Europe’s highest courts will now decide who’s right. Hearings are expected to begin sometime next year.

After Washington revamped the U.S. tax code earlier this year, Apple repatriated almost $300 billion in cash held overseas to the United States, as well as paid a one-off corporate tax charge to U.S. officials of a eye-watering $38 billion. Apple says that almost all of the value from its products worldwide is created in the U.S., so it should pay tax there, and not in other countries.

Such thinking has not gone down well with EU officials, many of whom openly grumble that Apple should pay more on its local operations (U.K. and Italian authorities have already squeezed out hundreds of millions of euros in tax revenue from the company).

Now, European policymakers are finishing up new digital tax proposals that would charge tech companies a levy of 3 percent on digital revenues generated within the 28-member bloc.

Apple has largely escaped the “techlash” that other Silicon Valley heavyweights have suffered | Justin Sullivan/Getty Images

The plans, which still must be unanimously approved by member countries and will affect the likes of Google and Facebook significantly more than Apple, have already been criticized by U.S. officials, who claim it would harm transatlantic trade just as tensions mount between Washington and Brussels.

Yet with EU officials hoping to reach agreement on the proposals potentially by the end of the year, the specter of tax hangs heavy over Brussels — just as Cook arrives to champion Apple’s privacy record.

“A digital tax is coming, like it or not,” said James Stewart, an adjunct associate professor of finance at Trinity College, Dublin. “Fighting it is like trying to keep back the tide.”

Mark Scott is chief technology correspondent at POLITICO.


Five takeaways from Abrams and Kemp’s heated debate

Democrat Stacey Abrams and Republican Brian Kemp faced off Tuesday night in their first debate in Georgia’s razor-tight gubernatorial race.

The debate, which also included Libertarian candidate Ted Metz, was marked by sharp personal attacks, hot-button issues such as immigration and health care, and continued allegations of voter suppression.

There was also a moment of local TV awkwardness when the forum was interrupted by a fire alarm. The debate paused for a couple minutes until the alarm was turned off.

With the race in solidly red Georgia currently rated a “toss-up” by the Cook Political Report, Abrams stands a chance at becoming the country’s first black female governor, and Tuesday’s debate could prove critical to either candidate.

Here are five takeaways from the debate.

Voter suppression allegations take center stage

Allegations of voter suppression led by Kemp, the current secretary of state, have become a major issue in recent days.

Abrams has called on Kemp to step down after The Associated Press reported that more than 53,000 voter registration applications — 70 percent of them from black voters — are on hold after failing to meet the state’s “exact match” law.

Georgia law requires an applicant’s information on a voter registration form to exactly match the information on a federal or state database.

Kemp said he would not resign as the candidates skirted around the issue early in the debate. The moderators later asked Kemp directly about voter suppression.

Kemp strongly defended himself against the allegation, saying he is “absolutely not” using his position to suppress the minority group. He called the idea that he is doing so a “farce” meant to be a “distraction” from Abram’s “extreme agenda.”

Abrams shot back that “the right to vote is a right,” discussing her family’s history struggling for voting rights. She alleged that “more people have lost the right to vote” under Kemp, saying that he helped create “an atmosphere of fear.” 

“Voter suppression isn’t only about blocking the vote. It’s also about creating an atmosphere of fear, making people worry that their votes won’t count,” she said.

Immigration emerges as key issue

Immigration also took the spotlight, with Kemp accusing Abrams of wanting to allow illegal immigrants to vote in the election.

Kemp appeared to be referring to comments Abrams made at a campaign stop earlier in October where she said a coming “blue wave” will include both documented and undocumented immigrants. Conservatives have seized on the comments to accuse her of encouraging illegal voting. 

Kemp said “Georgians should simply Google the clip” to see for themselves what Abrams said.

Abrams said she has “never in my life asked for anyone who is not legally eligible to vote” to do so. Instead, she brought the question back to the issue of voter suppression.

“What I’ve asked for is that you allow those that are legally eligible to vote, to allow them to cast their ballots,” she continued. 

Immigration came up again with a discussion about the Deferred Action for Childhood Arrivals (DACA) program, which the Trump administration moved to rescind last year. Multiple federal judges have blocked ending the program since that announcement.

Kemp doubled down on his belief that students benefitting from DACA program should not be allowed to receive in-state tuition for the state’s colleges, saying such immigrants do not count as “our own people.”

He also criticized Abrams’ support for Georgia’s HOPE scholarship, which can provide financial assistance to undocumented students.

Abrams framed her support for the scholarship program in economic terms, saying it can help fuel the state’s economy and address its nursing shortage.

Medicaid is a defining issue in this race

The two candidates also butted heads over Medicaid, an increasingly contentious issue as Democratic candidates have pushed to expand the government program that provides medical care to some individuals in need.

Abrams sought to present Medicaid as a “bipartisan” program offering Georgia’s “only” health-care solution, while Kemp called her proposal “a single-payer radical government takeover of healthcare.”

“My day-one priority is expansion of Medicaid,” Abrams said, later calling it the “only one solution in the state of Georgia.” She added that, having “been through 11 legislative sessions,” she knows it will take “more than a day.”

Abrams promised her health care plan would cover half a million Georgians, giving them “access to health care they need.”

She contrasted her plan with Kemp’s, saying his health care plan consists of nothing “other than saying trust your insurance companies.”

Abrams later in the debate made an appeal for Medicaid expansion directed toward rural voters, who are facing an increasing strain as local hospitals shut down throughout the state. 

“I know that we all care about Georgia families,” she said. “I know that we do not want to see more rural hospitals close.” 

Candidates did not hold back from personal attacks

The debate was marked by personal attacks on all sides, with Abrams and Metz accusing Kemp of shady and unethical behavior while Kemp hit Abrams over her taxes. 

Kemp throughout the debate made an issue of Abrams’ taxes, accusing her of failing to pay them even though she is a tax attorney.

“When you put politics over paying the government the taxes you owe, that does make you unfit to be governor,” he said.

“My wife and I have always paid our taxes,” he added.

Abrams explained that she had to defer paying her taxes when she was paying for her father’s cancer treatment.

“You can defer taxes but you can’t defer cancer treatment,” she told Kemp.

Abrams also stepped up her criticism of Kemp, accusing him of creating “an atmosphere of fear” for Georgia voters as she hit him repeatedly over his questionable voting rights record as secretary of state.

She brought up a report that found more than 3,000 law enforcement officials in the state were on food stamps due to low wages. Kemp has said it is not the state’s responsibility to deal with the issue, referring it to local governments.

“Why is it not the governor’s responsibility to ensure that law enforcement officers protecting our state are paid a living wage?” she asked.

Later, she said she would always make sure police officers “can put food on their tables while we ask them to protect our families.”

The two candidates throughout the debate called the other’s comments “dishonest,” “cherry-picked” or “misleading.”

Metz, who for the most part went ignored by the two candidates, at the end associated Kemp and Abrams with “corruption.” 

He said a vote for him was a vote against the “oligarchs” running the country. 

Abrams emphasized bipartisanship, Kemp played to his base  

Throughout the debate, Abrams made more efforts to present herself as a bipartisan, center-of-the-road candidate while Kemp doubled down on his conservative record.

Kemp touted the same positions that endeared him to President TrumpDonald John TrumpTrump to fundraise for 3 Republicans running for open seats: report Trump to nominate former Monsanto exec to top Interior position White House aides hadn’t heard of Trump’s new tax cut: report MORE and his loyal base. He raised fears over what he referred to as “illegals” and pledged to fight for conservative values against socialism.

Abrams, on the other hand, mentioned more than once that she “reached across the aisle” during her time as a state legislator, calling herself the “only” candidate with a “strong record of bipartisan leadership.”

She touted her unequivocal support for local law enforcement, and even invoked Vice President Pence’s support for Medicaid expansion when he was governor of Indiana, saying she and Pence agree because it is a proven “bipartisan program.”

During the immigration discussion, Abrams avoided overarching moral arguments and stuck to a discussion of how DACA children can contribute to the Georgia’s economy.

Kemp got in the final word of the debate, accusing Abrams of promoting “radical” and “extreme” policies.

“Not even California is that liberal,” he said of her stance on immigration, adding that he hopes to “fight for our conservative values.” 


Trump: Fed is ‘biggest risk’ to U.S. economy

Donald Trump

Over the past few months, the president has given a number of different reasons why he‘s unhappy with the pace of the Federal Reserve’s rate hike campaign. | Manuel Balce Ceneta/AP Photo

President Donald Trump delivered some of his most pointed attacks yet on Federal Reserve Chairman Jerome Powell on Tuesday, calling the central bank the “biggest risk” to the U.S. economy.

In an Oval Office interview with The Wall Street Journal, Trump said Powell “almost looks like he’s happy raising interest rates.”

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“Every time we do something great, he raises the interest rates,” Trump said. Asked if he regrets appointing Powell, he said it was “too early to tell, but maybe.”

Trump said he didn’t know under what circumstances he might attempt to remove the Fed chairman but added: “I’m very unhappy with the Fed because Obama had zero interest rates.”

The president’s comments came amid another volatile day for the stock market. A couple of weeks ago, when the three major equity market indexes dropped more than 3 percent in a day, Trump said the Fed had “gone crazy.”

Over the past few months, the president has given a number of different reasons why he‘s unhappy with the pace of the Fed’s rate hike campaign: He wants a weaker dollar to boost exports to help with trade negotiations; he doesn’t think inflation is at risk of getting out of control; and he wants to pay down the national debt. He has also generally said that he prefers low rates.

The Fed has been sticking to steady rate hikes — about one every quarter — in an attempt to support sustained economic growth without accelerating inflation as the near-record expansion continues. New tax cuts and increased government spending are speeding short-term growth, but wage gains are still moving at only a modest rate.

The central bank kept interest rates close to zero for nearly a decade to help the economy recover in the wake of the 2008 financial crisis, but has been slowly bringing them back to a normal level as the economy has strengthened.


Abrams, Kemp spar over voting and immigration in Georgia governor debate

Stacey Abrams and Brian Kemp

Democratic gubernatorial candidate for Georgia Stacey Abrams has called for her opponent, Secretary of State Brian Kemp, to resign as the state’s top election official while running for governor. | John Bazemore/AP Photo

Voting rights and illegal immigration dominated a tense gubernatorial debate in Georgia Tuesday night, as Republican Brian Kemp and Democrat Stacey Abrams clashed over their visions for the state’s future.

The debate came as Kemp, the secretary of state, defends himself against accusations of voter suppression from Abrams and Georgia Democrats, who have latched onto a report that 53,000 voter registrations, mostly by African-Americans, have been held up by Kemp’s office ahead of the election. Abrams, the first black woman to win a gubernatorial nomination, has made new voter registration a key part of her campaign and career.

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“If you look at the numbers, minority participation is up 23 percent,” Kemp said at the debate. “We have a million more people on our voter rolls today than we had when I took office. We’ve had record turnouts in our last presidential election and we’ve had record turnouts right now. This farce about voter suppression and being held up on the rolls and not being able to vote is absolutely not true.”

Abrams shot back that “under Secretary Kemp, more people have lost the right to vote in the state of Georgia, they’ve been purged, they’ve been suppressed, and they’ve been scared.”

Abrams has called for Kemp to resign as the state’s top election official while running for governor. He was asked if he could impartially serve as secretary of state while running for governor and whether he would recuse himself in the case of a recount. Kemp said he was staying put.

“I’m doing the same thing that Democrat Kathy Cox was doing when she was running for governor. If we have the instance of a recount, that’s automatic by state law if lower than one percent [separates the candidates],” Kemp said. “I have staked my integrity of my whole career on the duty that I have as Secretary of State. I’ve always fulfilled and followed the laws of the state and I’ll continue to do that through the tenure of my service to this great state.”

The debate, which also featured Libertarian candidate Ted Metz, often veered back to voting rights and immigration even when the questions turned to topics like health care or access to state colleges. Asked whether DACA recipients who are paying their taxes should be allowed to pay in-state tuition rates at state colleges, Kemp charged that Abrams would radically transform the state.

“I’ve been running my whole campaign about putting Georgians first,” Kemp said. “I think we need to continue to do that. Unlike Ms. Abrams who wants to give the HOPE scholarship and free college tuition to those that are here illegally, I think that is the wrong position to go.”

Abrams quickly responded: “I stand by believing that every Georgian who graduates from our high schools should be allowed to attend our colleges and if they’re eligible, receive the hope scholarship.

Kemp also accused Abrams of seeking illegal votes, bringing up a video that he said “clearly” showed that Abrams was asking for “undocumented and documented folks to be part of your winning strategy. So why are you encouraging people to break the law for you in this election?”

“Mr. Kemp, you are very aware that I know the laws of Georgia when it comes to voting,” Abrams said. “I have never in my life asked for anyone in my life asked for anyone ineligible to vote to cast a ballot. What I have asked for is that you allow those who are legally eligible to vote to allow them to cast their ballot.”

Kemp responded that Georgians should “google the clip” and see that Abrams was clearly talking about urging illegal immigrants to vote for her.

“That is outrageous,” Kemp said. “She knows that if you watch the video yourself you will see it first-hand.”