Telcos regulator seeks to monitor WhatsApp

If your model is not revenue based, then what you are talking about is not a tax, it’s a fine.

I’m curious as to what data you are using to determine that online services are “net negative”? Is this your assessment for Kenya specifically, or is your contention that globally, all online services provide net negative value to the world? There are multiple studies on the economic and social benefit of online services, so I am quite interested in learning of those which substantiate the net negative claim.

Also, is this specific to Facebook products, or all online services, including those created by Kenyans?

And would this tax regime be a global tax-in other words, should it also apply to Kenyan companies operating globally? For example, for those on this list with Kenyan companies offering online services, should this tax regime apply to them in Kenya? Should, for ex., Uganda apply a similar regime for Kenyan companies offering online services there?

In terms of the metrics you propose-Facebook is a public company, as are many companies offering online services. What is the relevance of funds raised in this context? In addition-valuation for a public company is a completely different metric than funds raised-curious as to how this would be made predictable, given that a good environment for economic growth depends to a great extent on a rationalized policy and regulatory environment?

As for the security issues-i have acknowledged previously the challenges and there, and there is excellent opportunity for collective thinking on how to deal with platforms that are a mirror of the divisions and risks in societies (which we are doing!) but nothing recommended below addresses or mitigates any of those risks. I am mindful that the most violent periods politically in Kenya predated Facebook and WhatsApp, so the notion that these platforms cause violence, or that taxing them would remove security risk is unsupported by any data whatsoever.

On Nov 6, 2018, at 12:12 PM, Patrick A. M. Maina <[email protected]<mailto:[email protected]>> wrote:

Whatsapp is not monetised and does not derive any revenue from anywhere yet (this will change next year). This should have no bearing at all on whether Whatsapp should be taxed or not. It is a billion dollar multinational company operating on a non-traditional business model. This means that it is our tax regulations which need to be *modernized* to rope in 21st century global business models that add a local cost burden on the government (e.g. increasing costs of security, turning kids into narcissistic screen zombies – with resulting impact on learning and metal health etc) yet do not contribute to the local kitty – which is unfair considering that they are *billion dollar* companies.

To put it differently, any shilling that Government spends to mitigate the risks of fake news in whatsapp or Facebook (e.g. buying ads to push correct position) is a subsidy paid to Facebook and Whatsapp. This is money that could have gone to health sector to buy medicine, sanitation for clean water or agriculture for food security. Instead it goes to fix a problem created by an entity that has net negative value to the economy. Not all innovation is good or beneficial!

How to tax Silicon valley business models: Use the same metrics investors use:
1. Estimated number of users / downloads
2. Risk / benefit factor (e.g. security risks or impact on jobs/wages)
3. Valuation (funds raised)

Silicon valley companies are designed to make losses for decades even as they move massive amounts of money (literally avoiding taxes by exploiting obsolete legislation). The real business they are in is the fundraising business but that is under the tax radar.

Signing off. Will check back later for updates.

Patrick

On Tuesday, November 6, 2018, 2:45:18 PM GMT+3, Ebele Okobi via kictanet <[email protected]<mailto:[email protected]>> wrote:

This is a fascinating and very timely conversation. As I’m sure all can imagine, I have many thoughts. ?
I do have a question, first-how much revenue does WhatsApp derive from Kenya?

On Nov 6, 2018, at 7:45 AM, evelyne wanjiku via kictanet <[email protected]<mailto:[email protected]>> wrote:

Dear All,

In suppport of Mr. Patrick Mainas Maina’s input.

The government needs to consider taxing the platforms. This is because they make money from us trade in our data and the revenue genereted benefits their countries and not ours given that they do not pay taxes here. This has been considered in Europe. In africa however, no country can apply this taxes on its own due to our ‘economically colonised’ position our countries find ourselves in. This means that the easiest option for our government becomes the easy route which is taxing the end user. This is counterproductive especially for those who use social media for productive activities. Therefore only a united african front would be succesful in getting these giants to pay up and keep our governments from considering taxing citizens. It is also important to consider that calls made on whatsapp, skype,viber cost less. This means that there is revenue reduction for the companies providing voice services. Considering that these companies are locally based and pay taxes to our government, why should their revenue be reduced by services that do not pay taxes to us? I suppose this is the logic used by countries like the UAE that block the use of whatsapp to make calls whithin their borders.

As for the ability of whatsapp to cause chaos, this is true and has been proven and whatsapp itself has acknowlegded this fact in countries like India and Pakistan. These are countries where fake news and inflammatory messages delivered mainly through whatsapp have led to chaos that have led to deaths of many people. Whatsapp has responded by putting in measures to ensure that such spread of hate news can be controlled from their end. Whatsapp also remains open open to suggestions as to how this can be contolled and is actively leading research in this area.

The question therefore should be, should we leave Whatsapp to be in charge of what is transfered on their platform and the consequences that follow? Should government have a role in monitoring how whatsapp is being used for harmful activities. Overall what is the role of government and the various platforms in ensuring this platform and others are used responsibly?

Good day to all

On Tuesday, November 6, 2018, 3:44:22 AM GMT+3, Francis Monyango via kictanet <[email protected]<mailto:[email protected]>> wrote:

Morning Mr Patrick Maina,

You mention how messaging apps facilitate fake news, crime and other things. You also lay peace,development on a scale versus human rights such as free speech and privacy.
Sir, it is good to be objective and factual. Last year Kenya had 10 months of hot politics. Research shows that the Kenyan authorities did not attempt to control, disrupt or shutdown the internet. Hence this tired line of the country going into flames because of the internet (messaging apps) doesn’t hold any weight. The number of Kenyan users of these messaging apps and other factors such as social class of users, bots affect the impact of the internet in democratic transitions. The broadcast media shut down in January should tell which communication medium has more impact on the Kenyan society. ?

I believe your intention was to state why companies that offer over the top services should pay taxes here. That is a different argument all together with a different set of facts unless you are advocating for a blanket over the top tax to be paid by users to avoid ‘spread of gossip and lies’ just like in Uganda.

On Fri, 2 Nov 2018, 13:26 Patrick A. M. Maina via kictanet, <[email protected]<mailto:[email protected]>> wrote:
These messaging apps facilitate fake news, crime, foreign meddling (to subvert democracy), brainwashing and hate speech on a massive scale. We know this for a fact.

So as citizens and stakeholders in our country, we need to ask: what do we value more, is it things that improve peace, stability, economic development and democracy, OR, is it some utopian, unbounded notion of free speech and privacy that is disconnected from our contextual reality (e.g. protects criminals, malicious defamers and violence mongers in equal proportion as law abiding citizens)?

The companies running these uncontrolled messaging platforms will not be impacted if our country goes up in flames. They cost governments tons of money in maintaining internal security (especially during democratic transitions – sometimes to existential levels) yet they don’t pay any taxes… and mark you, they are *billion dollar* companies! This also means that funds that ought to have bought, say, medicine to save lives gets diverted to fix an *imported problem* with no path to holding the parent company accountable for damage caused.

Gok needs to modernize our tax laws, which currently are based on the traditional “for profit” enterprise model and thus out of touch with Silicon Valley’s “make losses by design” model. The basic assumption that entrepreneurship is a profit oriented endeavour does not hold for Silicon Valley VC subsidized companies. They are designed to operate as loss makers for decades (but still move *massive* amounts of financial resources at massive scale). This has the technical effect of *tax avoidance* because massive profits *are* still being made by the offshore VCs – which denies governments billions in taxes (despite imposing local burdens as illustrated above).

A smart government would create modernized laws to tax VC funded Silicon Valley companies e.g. on the basis of *funding rounds* and *valuations* because this is their *real* business i.e. its how the investors intend to make money from day one – and the primary reason they push for perpetual losses!

There should also be a turnover tax and VAT on online revenue earned in Kenya by foreign billion dollar internet companies (e.g. advertisement revenue and appstore revenue), to level the tax playing field for local businesses. Similar to what other countries like the UK are working on:

www.wired.co.uk/article/facebook-uk-tax-bill<urldefense.proofpoint.com/v2/url?u=https-3A__www.wired.co.uk_article_facebook-2Duk-2Dtax-2Dbill&d=DwMFaQ&c=5VD0RTtNlTh3ycd41b3MUw&r=ArvepG4_wcNu_X9xi3nb_Xa9WsGLVfmK6mwPdVONOTE&m=t74BOKebo761FiLlF3R…>

CA will obviously have a hard time monitoring and enforcing though, under the current traditional framework due to technical barriers (e.g. encryption) and also due to jurisdictional challenges.

So the other thing that CA really needs to do once the rules are set is to consider blocking non-compliant foreign apps completely at ISP level (especially now that political temperatures are cool and people and thinking clearly). Lets have local startups filling any gaps with copycat apps China-style.

To be clear, I support free speech and privacy. But I also support peace, stability, safe neighbourhoods, democracy, sovereignty and economic predictability!

A delicate balance is needed to maximise the rights of law abiding citizens while minimising the ability of those with evil intent to exploit basic rights in order to harm the innocent.

Good day.
Patrick.

On Thursday, November 1, 2018, 11:00:44 PM GMT+3, Grace Githaiga via kictanet <[email protected]<mailto:[email protected]>> wrote:

Kenya is considering regulating online services such as WhatsApp and Skype in a radical move that could force the internet-based service providers to share data with the government.

The Communications Authority of Kenya (CA) is in search of a consultant to study and determine how the so-called over-the-top services (OTTS) operated by groups such as Facebook, which runs WhatsApp, and Skype owner Microsoft, could be regulated.

Read on: www.nation.co.ke/business/Telcos-regulator-seeks-to-monitor-WhatsApp/996-4833020-fn9u7s/index.html<urldefense.proofpoint.com/v2/url?u=https-3A__www.nation.co.ke_business_Telcos-2Dregulator-2Dseeks-2Dto-2Dmonitor-2DWhatsApp_996-2D4833020-2Dfn9u7s_index.html&d=DwMFaQ&c=5VD0RTtNlTh3ycd41b3MUw&r=Arv…>

Best regards

Githaiga, Grace

Co-Convenor
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