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Facebook Under Seige

Facebook Under Seige


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Facebook doesn't even play well with the ad industry. As my colleague Kate Kaye noted last week, Facebook doesn't use Ad Choices, the industry's standardized ad-privacy program (Amazon is the other big tech holdout). For agencies, Kaye wrote, this means that managing privacy compliance for Facebook campaigns "costs extra time and money, and perhaps most important, creates additional privacy concerns."But THIS is heinous:Facebook doesn't just screw users with its shifty privacy practices; it also engages in shifty (if technically legal) tax-dodging practices. Just before Christmas, Britain's The Guardian newspaper reported that Facebook uses a byzantine accounting technique called -- no kidding -- the "Double Irish" to drastically minimize its tax burden. Basically, "Facebook is structured so that companies buying advertisements ... anywhere outside of the U.S. have to pay Facebook Ireland." Through a complicated series of maneuvers involving royalty payments and transfers to the Cayman Islands, Facebook Ireland is then able to report a huge loss, "despite it accounting for 44% of the social network's revenues." Per Business Insider's math, that means Facebook paid just $4.64 million on its entire non-U.S. profits of $1.34 billion for 2011 -- an effective tax rate of 0.3%.

I'd much rather Facebook spend money on hiring people around the world and acquiring companies than wasteful government programs.

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