21/03/2018 BBC Business Live

This is Business Live

from BBC News, with Sally

Bundock and Rachel Horne.

Taxing the tech titans -

the European Commission is set

to make big changes to the loopholes

open to the likes of Amazon,

Google and Apple.

Live from London,

that's our top story

on Wednesday 21st March.

The EU slaps down Silicon Valley -

reports suggest that new measures

will stop the practice of shifting

profits to countries

with the lowest rates of tax.

Also in the programme,

more investor reaction

to the Facebook data row.

The social media giant suffers

another big drop in market value.

Does Mum knows best?

A mixed day emerging markets in

Europe. We will talk you through the

winners and losers.

Does Mum knows best?

We'll be looking at a new social

network designed to help mums

share their experiences.

And #deletefacebook has been

trending on Twitter -

we want to know have

you checked your privacy settings?

Just use the #BBCBizLive.

Hello and welcome to Business Live.

Welcome to the programme.

Let's start with a focus

on the tech world.

The European Commission plans to get

the world's biggest tech companies -

the likes of Google,

Facebook and Amazon -

to pay their fair share of tax.

These firms have been criticised

for booking their profits

in countries with the lowest

corporation tax rate.

Brussels' plan is to tax a companies

digital revenues based

on where users are located,

rather than where their

headquarters are.

For example, the French

government collects just

over 33% in corporate taxes.

This compares to a tax rate

of just 12.5% in Ireland.

Under the EU's plans, there will be

a blanket 3% tax on sales,

collected in the country

where sales takes place.

It could include products

such as Google's

advertising services,

or Apple's streaming services,

although the details are unclear.

With me is Oliver Smith,

senior reporter, Forbes Europe.

Oliver, let's start. -- let's start

there, the details are not the

clearest. How will they define these

tech companies?

Countries like

France have been calling in Europe

to act on this problem for years,

now finally they are. They are

defining these companies as those

that make them money from streaming

services, subscription services and

advertising. Companies like Google,

Apple, Spotify are all potentially

in the limelight.

What is

interesting is 3% may sound like

quite a low tax bracket. But it is

3% on revenue, not profit?

That's

quite unusual. It is quite a blonde

force approach. -- blunt force

approach. Because of countries like

France and Britain, who were coming

up with their own taxes because

Europe has not been active, so now

the EU feels it has to do something

and act quickly. This is the

quickest way of putting down a

blanket tax across Europe.

They are

announcing today. It has to be

ratified by EU members. When should

we see it come into play?

We really

don't know. It could be months, it

could be longer. The EU wants to

come up with a longer term plan to

stop profit shifting around Europe.

These things will take a lot of

time. Not any time soon,

unfortunately.

Say I run a company,

and you are my retailer in Germany,

Sally lives in Italy. Where does the

tax get paid?

Sally is the

subscriber to the digital service,

the country she is in is the country

where the tax will be collected.

That is very different to how it

works today, where the tax should be

collected at source where the

company is headquartered. That is

the shift. It is where the consumer

is based rather than the company.

A

lot of people will look at this and

think, these big companies, deep

pockets of resources, they will get

out of this one?

Yeah, and I'm sure

we will hear about stories just like

that. The good thing about taxing it

where the customer is based, is it

should give the EU more power to

actually see where the money is

moving. When you are trying to

figure out the profits, it becomes

quite complicated, especially with

the system is the companies have. We

have to wait and see but hopefully

it gives them a good tool to use.

Laura Smith, thank you.

-- Oliver Smith.

Let's take a look

at some of the other

stories making the news.

German prosecutors have raided

the headquarters of BMW

as part of an investigation

into the suspected use

of emissions cheating software.

About 100 police and law enforcement

officials searched the luxury

carmaker's Munich headquarters

and a site in Austria.

They opened an investigation last

month over suspected fraud.

Toyota has suspended US tests

of driverless cars on public

roads, following a fatal accident

in Arizona involving one

of Uber Technologies'

self-driving vehicles.

Toyota said it was concerned

about the "emotional effect"

the incident might have

on its test drivers.

Facebook is being investigated

by the US Federal Trade Commission

over the alleged misuse of user data

on the network.

It comes after allegations that

50 million Facebook users' private

information was misused by research

firm Cambridge Analytica.

The UK-based firm suspended

its chief executive on Tuesday.

We'll get more on this story

later in the programme.

China's Tencent, the

owner of the popular

we-chat messaging app,

is now about $72 billion more

valuable than Facebook as the US

social networking giant deals

with a string of controversies.

There is a lot going on in financial

markets at the moment.

Tencent is due to

reports its latest set

of financial results later today.

Sarah Toms is in our Asia

business hub in Singapore.

Sarah, this is interesting, how

things are changing. As Facebook

Foals, Tencent is seen as more

valuable?

That's right. Tencent is

often known as China's Facebook. It

seems very appropriate at the

moment. The two social media giants

have been neck and neck in value for

quite some time. But now the gap has

widened after the crisis. Billions,

tens of billions of dollars in fact

have been wiped off the value of

Facebook. And of course as Facebook

is dealing with this crisis, China's

largest corporation is riding on a

huge wave of success. It has got

some new hip games, a growing ad

business, and the momentum is still

growing for a wee chat, the all in

one messaging service that drives

it. Tencent is just about to release

its earnings. This is a very

important timing. Investors

expecting some strong results.

Tencent is projected to report a 56%

growth for the last quarter of last

year. This is bound to be a positive

impact on the Tencent stocks

tomorrow. As a result, we could even

be seeing a bigger gap between

Tencent and Facebook.

Yes, we will

watch this space closely. Let's look

at marketing General. We had a day

of no action at all in Japan. That

is actually Tuesday's close.

Elsewhere in Asia we saw a mixed

day. Monday and Tuesday were days of

is quite significant declines for

Asian share markets. Today wasn't

too bad. Emma Gees shares were in

favour. -- energy shares. Opec is

accelerating plans for curbing a

worldwide supplied last. The oil

price has been going up, energy

stocks in favour. Lots of corporate

news out today. Take a look at the

Business Live page, which keeps you

up-to-date. B&Q shares down 7% in

London. Disappointing results. Moss

brass -- moss brass shares down as

well. A disappointing trading

statement. I Street retailers really

struggling. News of -- news of an

emergency loan from Carpetright. It

has got emergency funding. That

gives you a sense of what is going

on. Very busy. Add to that the

Federal reserve. It will wrap up

it's two-day meeting.

And with more details

on the Federal Reserve

meeting later today,

Kim Gittleson has this

report from Washington.

He has the wisdom and leadership to

lead our economy through any

challenges are great economy may

face.

On Tuesday, Jerome Powell got to

live the dream. He began his first

meeting of the head of America's

Central bank.

The Federal reserve is

one of the most important

institutions in our government.

Most

people expected -- expect the

Federal Reserve to impress interest

rates. -- increase. But the problem

is who will be impacted by an

increase. There are three main

groups. Savers have not been able to

learn anything on their savings for

nearly a decade now. But slowly,

very slowly, savings are starting to

increase in the United States. The

second group are American workers,

who may have to pay a little bit

more for a mortgage or a car loan.

American workers are taking on

bigger paycheques. They should be

able to weather a rate increase. The

group that should be worried is US

corporations. Today one in ten of

them are zombies. Instead of gorging

on brains, they have been gorging on

cheap debt. Now they are not making

enough in profits to cover the

interest on that borrowed money. So

when the Fed starts raising interest

rates, well, the walking dead could

be headed for the unemployment line.

It is not often you see zombies on

Business Live! We are open to

everything.

Joining us is Ben Kumar,

investment manager at

Seven Investment Management.

Let's talk about the Federal reserve

decision. Everybody is expecting a

rate rise, aren't they?

They are.

Everybody has talked a lot about the

new governor coming in. He is part

of the establishment. He has been on

the Fed for years, he has been on

the Treasury. He is not some random

guy. He is embedded in the policy in

the US. People are not expecting any

different process than we have seen

already. A rate rise today and a

couple more in the next six to nine

months.

Rates could go up four

times. What you just said about

Jerome Powell, business as usual,

that is a help right now, isn't it?

Absolutely. The Fed has done a

fantastic job of getting interest

rates up. That has kept markets

calm. It is important the

continuation of that is his policy.

You will see him struggle a little

bit with the first communication he

has to make. But that is OK.

Let's

talk about a story Sally has been

excited about. Amazon and alphabet

have overtaken Amazon in terms of

market share. Other way round,

sorry!

It's just kind of showing us about

sentiment and perception at the

moment about Facebook shares, Google

shares.

Your thoughts? Alphabet

makes most of its revenue from

advertising. It is Google ads. They

are targeted, they do involve data.

Amazon is a bit different. It makes

money from lots of different places

and not so much the advertising. It

does get a sentiment kick when we

see companies like Facebook and

Google being pressured by people

asking, are they doing nasty things

with my data?

The concern is more

tighter regulations, and companies

like Facebook having less scope to

make money out of our information?

Absolutely. The digital world has

undergone some scrutiny. The EU tax

we talked about. The idea of data

and privacy, regulators are starting

to get up to speed.

Nobody knows how far this could go.

You will be back to talk about the

papers at the end of the programme.

It is not often he has more to do.

Still to come - mum's the word!

Later in the programme we'll take

a look at the new smartphone app

which is helping mums meet up.

You're with Business

Live from BBC News.

Insurer Lloyd's of London has

reported a £2 billion

loss for last year,

describing it as "one

of the costliest years for natural

catastrophe in the past decade".

It was the insurer's

first loss in six years.

That compares with a £2.1

billion profit in 2016.

Earlier we spoke to Inga Beale,

the chief executive

of Lloyd's of London.

This really shows Lloyds,

I would have said,

to its full strength.

We have been around for 330 years

now supporting businesses and people

get their lives back together

when disaster strikes.

We saw some very tragic

scenes last year.

We had hurricanes

sweeping through the US -

Hurricanes Harvey, Irma and Maria.

There was also an earthquake

in Mexico, there was flooding

in South Asia, wildfires

in California, I mean there were

so many tragic events happening.

But then Lloyds stepped

in and we paid out last year

about £18.3 billion in claims,

basically putting people

back on their feet.

And despite that, Lloyds

is in a really strong position.

At the end of the year

no syndicate failed,

every syndicate is still in business

and was recapitalised,

meaning that Lloyds is in a really,

really strong position.

When it comes to something

that we can model, we do a lot

of statistical modelling around

the risks that we take on,

all of those exposures,

and in fact the whole insurance

sector has spent billions

trying to understand this.

When something like climate change

is impacting these events,

we have to build that

into our modelling and our

forecasting of how much

these events can cost.

But while we can quantify

what they cost, we don't know

when they will happen

and that is one of the difficult

things nobody can assess.

But we make sure, therefore,

that we have enough capital

in the market to support those

potential disasters and that is how

we run our business model.

And of course we have to make sure

that we collect premiums in,

that we look after those premiums

and invest those premiums

because on the other side we pay out

claims but we also make

some investment income.

That was the chief executive of

Lloyd's of London. There was a story

we mentioned, copyright clinching an

emergency loan from looking at a

voluntary agreement to help it

reduce the property issue joining

the likes of Biron and Jamie's

Italian, all struggling on the high

Street.

You're watching Business Live.

Our top story -

the European Commission is set

to announce new measures to prevent

tax avoidance by the world's

biggest tech companies.

The new rules are expected

to force the likes of Apple,

Amazon and Google to pay taxes

in the country where sales

are made, as opposed to the current

system where companies pay taxes

where they book their profits.

More detail on that on our website.

Let's get the inside track

on a new social network

which is hoping to provide parents

with friendship and support.

Mush was born when Katie met

co-founder, Sarah Hesz,

in a playground on a rainy day.

The pair struck up

a chance friendship,

but realised that technology

could provide a far easier way

for like-minded mums

to meet one another.

With us is Katie Massie-Taylor,

co-founder of mum's

networking app, Mush.

Thank you for coming in. This was an

invention born of necessity, you

were feeling a bit lonely and

overwhelmed and you met up with

Sarah and it went from there?

She

came and chatted me up in the

playground! That was three and a

half years ago and three months

after we had spent every day

together doing average stuff, we

realised the lifeline the friendship

had been and there was not

technology there to make it easy for

local mums to meet other mums in the

area.

We have heard from other

social media website, even Peanut

which is a similar app, but what is

unique about your app?

We were the

first ones to come out with an app,

websites had existed and done a

wonderful job of giving online

support but what we wanted to do was

facilitate off-line meet ups. Mums

can find other mums nearby and

message and meet up together and

meet in a group as well. That is

what we stick by now. We have group

meet ups through the app which sets

it apart from anything else which

maybe looks at 121 friendship.

How

are you making money?

We have been

fortunate to get VC funding, people

who spot the opportunity for social

network to come from this. By happy

consequence it has been something

that mums really love and are asking

us for features and functionality

that we can add as a premium

feature.

So basically it is free but

if you want more you have to pay for

that? And a monthly fee?

That is the

idea, it is a year away but that is

where we will ultimately end up.

You

are a social network, at a time when

social networks are in the headlines

overprotection of user data so what

are you doing to your users safe and

have you been approached by

companies looking to buy the

information?

Safety is key for the

users, it is something mums feel

passionately about, the data about

themselves and their children

remaining safe and that has always

been at the forefront of our minds.

We don't sell any third party data,

we proudly keep it to ourselves and

partly the reason we are looking to

monetised over premium substituent

is so we're not playing to the

Browns. This is an attractive

audience to them -- Iturbe brands.

We want to make the product

brilliant for the mums rather than

to sell their data.

This is the whole issue of what apps

you are using and the information

you are giving out, you don't know

where it might end up or how it is

being used but I guess you are

saying with your app that you pay

for a service and that it intends up

out we are monetising it, when not

being paid to push clothing wear on

you or health products or whatever.

There is no hidden agenda. Last week

I looked at our privacy policy and

made it clear, there is nothing to

hide, we are here to help and

support mums, there is no other

agenda.

Thank you very much for your

time. The other co-founder is

watching, server.

She has just had a

baby!

Congratulations -- Sarah. Here

is how Tuesday in touch. Stay

up-to-date with all of the business

news as it happens on the BBC

Business Live page weather is

analysis from our team of editors

around the globe. And we want to

hear from you as well also get

involved on our web page. And on

Twitter and you can find us on

Facebook. Business Live come on TV

and online, what you need to know

when you need to know it. Ben is

back. We have the issue of Facebook

which is very much in the press.

Let's talk about some of the

coverage. We were talking about the

share price. One thing I was put

into a low-cost bond and in San

Francisco, in the long-term, how

damaging is this for Facebook? It is

hard to measure at this point?

We

have seen a few privity scared in

the last decade and has managed to

come back and improve privity

settings but this seems to go wider,

this is selling data with it seems

like Melissa 's outcome and that is

troubling.

Let's look at what people

have been saying -- malicious

outcome. Luke says he did check his

settings and yet deleted his

account, he will not be using it

again. Andrei said he always update

his proceeds settings but shies away

from some of the more confidential

questions. Another says yes, I have

disabled apps. A lot of people are

looking at everything. And also on

Twitter there was one from Nordea

who have said they have put Facebook

investment on quarantine in their

sustainable funds. When you get big

corporations like that voicing

concerns about what can it mean for

something like Facebook?

It is a

real problem, sustainable funds are

getting larger and larger. When they

avoid an industry or a sector it

damages it. Think of the oil

industry and people moving away from

it. Facebook and companies that

cannot prove they protect their data

could be in trouble.

Let's talk

plastic which is in the news. A new

scientific report is warning us that

in the next decade the amount of

plastic in the sea will treble.

Despite the fact there has been so

much publicity about this problem it

is going to get worse and commercial

organisations are making the most of

the oceans which is interesting.

It

is the ocean is 70% of the world and

it is not really regulated. Other

than close to shore, corporations

can get away with it, and there is a

lot of press but mainly in the

developed world. In emerging market

company is basically able to dump

stuff in the ocean without

consequence.

We talked about

harvesting the sea bed for seaweed

or putting up wind farms and some of

this is being done without

regulation and companies are taking

advantage of a free resource is how

many people see it.

So much is

readily do on land, companies are

looking that there is masses of

space and Rhys Oates and nobody is

controlling what they do.

Another

interesting story in the New York

Times, the Saudi Arabian crown

prince is in the US, he met with

Donald Trump yesterday. It is all

over the media. They are talking

about how they get on extremely

well, the White House reinforcing

Trump's commitment to air apparent.

It seems they are on the same page

on many issues.

They seem to have

some sort of camaraderie, there is a

lot of support between them. The

interesting thing when you look at

Saudi Arabia and Aramco, are they

pulling back because the oil price

has gone higher?

That is the market

listing of the state owned Aramco

which is worth a heck of a lot and

the stock markets around the world

want a bit of the action. It has

been a couple of years there has

been talk of this listing in London

and New York both trying for it to

be listed.

The size of this company,

it will be the first trillion dollar

company, maybe even $2 trillion also

at flotation. It is why people want

to get involved. Saudi Arabia are

saying, maybe we like it being a

state run and not having to tell the

market exactly what we do behind

closed doors.

Interesting. Thank you

for your time.

That's it from Business Live today.

We will keep you up-to-date

throughout the day on our website

and also here on the BBC. Thank you

for joining us, we will see you

tomorrow. Goodbye.