Bershidsky on Europe: U.K. Gets YouTube Controls
Here's today's look at some of the top stories on markets and politics in Europe.
Italy's Renzi unveils tax cuts .
Italian Prime Minister Matteo Renzi made public his plan to cut payroll taxes by $13.9 billion a year. The program's catchy slogan is "1,000 euros for 10 million Italians" - that's how much per year people with monthly incomes below $2,000 are going to save. Renzi also promised a cut in local business taxes and swift payments on the government's $94 billion in outstanding bills. The arrears are not even fully accounted for: Italy's public finances are a shambles. Renzi is beginning an overhaul by following in the footsteps of Spain, trying to stimulate sagging household spending and business activity. He has the second mover's advantage: Spanish recession-fighting policies have already proved successful. Italy is only a couple of years behind and if Renzi manages to develop some momentum he can repeat that success, while gaining popularity in the process.
Game developer King values itself at $7.6 billion.
King Digital Entertainment, the creator of Candy Crush Saga, one of the most popular games for mobile devices, is planning an initial public offering in the U.S. and has valued itself at $7.6 billion. King is not an American company. In fact, its "nationality" is difficult to determine: It was founded in Sweden, incorporated under U.K. law and domiciled in Ireland. Its development centers are in London, Bucharest, Barcelona, Berlin and San Francisco. King is one of a new crop of companies that can both make and sell their products anywhere. The fact that their corporate infrastructures are set up for legal and tax convenience has nothing to do with unpatriotic tax avoidance: They are true corporate citizens of the world. Indeed, they could operate from outer space, if that were convenient. Current legal frameworks were made for a different, geographically pegged world and companies like King are here to demonstrate their obsolescence.
Google gives U.K. authorities priority right to screen content .
Google has granted U.K. security officials "super flagger" status on YouTube, which allows them to flag whole batches of content, not just individual videos, as undesirable. The idea is to purge YouTube of "extremist" content, mostly of the jihadist variety. The officials will not be able to remove the content, but Google is likely to do that after it is flagged. That's not enough for the government: It is pressuring internet providers and social networks to change their algorithms to display extremist material less prominently. All these developments have so little to do with the freedom of speech as we know it that it will soon be difficult for both Google and many Western governments to claim it as a fundamental value.
EU turns against Russian pipeline projects .
As a way of putting pressure on Russia to stop the invasion of Ukraine, the European Commission is putting the brakes on two Russian natural gas pipelines to Europe. It has decided to freeze talks on South Stream, a major project to deliver about 15 percent of the EU's gas demand via the Black Sea, bypassing Ukraine. The EC has also crushed Russia's plans to pump more gas through the Opal pipeline through Germany to the Czech border. Neither project is crucial to Europe's natural gas supply or to the Russian natural gas monopoly Gazprom, which is not using the full capacity of the current pipeline system, anyway. Last year, Gazprom increased supplies to the EU, and Europe will now push against its further expansion, cutting into the company's profits as natural gas prices decline. This kind of retaliation, however, is too insignificant for Russian President Vladimir Putin to give another thought to what he is doing in Ukraine.
U.S. accuses EU of undermining trade deal.
The U.S. is accusing European partners of going back on their pledge to remove all customs tariffs on U.S. goods. That idea was behind the talks started last year on a Trans-Atlantic Trade and Investment Partnership, the world's biggest such deal that would cover almost half the global economy. The free movement of goods, which both sides agreed would be their goal, is, however, as far-off as ever. EU negotiators have told their counterparts that U.S. beef, chicken and pork would only be allowed into Europe under a quota system. That angered the U.S. side, which claimed it was a departure from the original agreements. In response, the EU says it has already offered to remove tariffs on 96 percent of U.S. goods while the Americans offered not to charge duties on 88 percent of European goods.
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(Leonid Bershidsky writes on Russia, Europe and technology for Bloomberg View. Follow him on Twitter at @Bershidsky.)
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