Why an ‘Amazon Tax’ won’t hurt the data barons

Just as small business leaders should not fear the government’s digital services tax, the government should not see the measure as a catch-all solution when it comes to tackling the tech giants, writes Mark Ash, CEO at marketing automation suite Pure360.

If there was one measure in the Chancellor’s Autumn budget statement that encapsulated the mixed feelings many of Britain’s small business leaders will have felt watching it, it was the announcement of a two percent levy on the UK-generated revenues of some of the world’s largest digital giants.

The proposal, which targets search engines, social media sites and online marketplaces with a global turnover in excess of £500m, doesn’t affect the nearly six million small businesses who form the backbone of the UK economy and is designed instead to bring tech giants in line with the rest of the country when it comes to paying their fair share. However, while the new tax measure succeeded in grabbing the headlines, the reality is that we are yet to see any kind of concerted effort to hit the digital behemoths where it really hurts; their chokehold on customer data.

While a digital services tax may have honourable intentions, it is little more than window dressing if it fails to challenge the true dominance of the data barons. A digital tax doesn’t do anything to address the throttling of access to customer data, which is the real operator of success in today’s digital marketplace.

Tech giants are suffocating independent and online-only businesses by controlling access to digital data, leaving smaller companies with no choice but to pay the likes of Google, Facebook and Amazon just to access their own customers. In doing so, contact details are offered up to the highest bidder. Ultimately, the customer is the one who will lose out, as it is their information that risks ending up in the hands of bad actors who may seek to leverage in ways that they never agreed to in the first place.

With an anticipated rollout in 2020, experts are already warning that the data oligarchs will have more than enough time to wriggle free of the proposals by finding the kind of loopholes which have allowed them to avoid paying their fair share of tax for years already. So, while the measure has been sold as a sure-fire way to save Britain’s ailing high street economy, the fact is that digital taxation won’t do anything to revitalise a retail industry which is increasingly moving online.

The danger for small businesses is what happens when the many who mistakenly believe in online taxation as a route to reviving Britain’s town centres and shopping precincts fail to see the anticipated results, as a push for more general measures to target online companies of all sizes could seem like an attractive prospect to appease the demands for action.

It remains to be seen what the effect of the digital services tax will be in the long term. But for those of us who know the tech giants’ stronghold over customer data all too well, it would be encouraging to see proposals designed to loosen their grip, even if only by a finger or two.