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Italy Begins Audit of Meta in Tax Case That Could Cost Facebook Parent $925 Million

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Italy expects to take until the end of the year for an initial assessment of Facebook parent Meta in a tax case that could land the US company with a bill of around 870 million euros ($925 million or roughly Rs. 7,609 crore) and prove a test case for the tech sector.

Although a modest sum for a company that brought in more than $32 billion (roughly Rs. 8,225 crore) in revenue last year, the case could have much wider ramifications for the industry as it hinges on the way that Meta provides access to services such as Facebook and Instagram.

The case stemmed from an Italian audit that claimed Meta user registrations could be seen as a taxable transaction as they implied the non-monetary exchange of a membership account for the user’s personal data.

The audit, devised and carried out by Italy’s Guardia di Finanza (GdF) police, was passed on by the European Public Prosecutor’s Office (EPPO) and a criminal investigation was opened earlier this year by Milan magistrates.

That has prompted a dialogue between Meta and the Italian tax agency — the assessment phase — which will end this year either with the company’s acceptance of payment or with the start of tax litigation.

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The assessment, according to a source with direct knowledge of the matter, involves the highest ranking Italian tax officials because of the sensitivity of the issue. Its outcome will condition how the criminal investigation is pursued.

Meta said it takes its tax obligations seriously, pays all tax required in the countries where it operates and will fully cooperate with the Italian authorities.

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“We strongly disagree with the idea that providing access to online platforms to users should be charged with VAT,” a Meta spokesperson said in an emailed statement to Reuters.

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Italy’s tax police and revenue agency calculated a model under which Meta would have had to pay around 220 million euros of sales tax in the country in 2021. The figure for the period back to 2015 was calculated at 870 ($925 million or roughly Rs. 7,609 crore) million euros.

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“The GdF objection would essentially stem from the fact that social memberships, although allowed free of charge, implied the payment of a non-monetary consideration represented by the users’ concession to META’s use of their personal data,” said Sergio Sirabella, an international tax adviser.

He added that the GdF approach would be successful if it established “a direct link between the provision of free membership to online platforms and the data that is harvested from users”.

“The consequence of this would be that the entire industry sector of digital platforms and the tech giants would have to review how users access data,” added Sirabella, who has lectured at the GdF’s Economic Financial Police School.

Meta will base its defence on the argument that there is no direct link between its services and access to data that can help advertisers to target consumers.

The EPPO is awaiting the outcome of the Italian case before it decides whether to pursue similar action in other European Union states, a source with knowledge of the matter had said. 

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© Thomson Reuters 2023


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From the Nothing Phone 2 to the Motorola Razr 40 Ultra, several new smartphones are expected to make their debut in July. We discuss all of the most exciting smartphones coming this month and more on the latest episode of Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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YouTube Announces AI-Enabled Editing Products for Video Creators

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YouTube will roll out a slew of artificial-intelligence-powered features for creators, the latest effort from parent company Alphabet to incorporate generative AI — technology that can create and synthesize text, images, music and other media given simple prompts — into its most important products and services.

Among the new products YouTube announced Thursday is a tool called Dream Screen that uses generative AI to add video or image backgrounds to short-form videos, which the company calls Shorts. It also announced new AI-enabled production tools to help with editing both short- and long-form videos on its platform.

“We’re unveiling a suite of products and features that will enable people to push the bounds of creative expression,” Toni Reid, YouTube’s vice president for community products, said in a blog post timed to the announcement Thursday. The Google-owned video platform first announced that it was developing the tools in March.

Google has been under pressure to show results and practical applications for its generative AI products. Some critics have been wary the company, which has long been seen as a leader in artificial intelligence, was falling behind upstarts like OpenAI or rival Microsoft, and that the products Google was rolling out weren’t yet ready for public consumption. OpenAI’s ChatGPT and a new Bing chatbot from Microsoft — which has invested $13 billion (nearly Rs. 1,08,100 crore) in OpenAI since 2019 — have been wildly popular and gained mainstream favour. 

Over the past few months, Google launched its own ChatGPT competitor, Bard, and released a steady flow of updates to the product. It’s  also incorporated experimental generative AI features into its most important services, including its flagship search engine, in what the company calls its experimental “search generative experience.” The product generates detailed summaries based on information it’s ingested from the internet and other digital sources in response to search queries.

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The announcement of the new features also comes as YouTube is locked in fierce competition with ByteDance‘s TikTok and Meta Platforms‘s Instagram Reels to gain more share of the vertical, short-form video market. YouTube said it now sees more than 70 billion daily views on Shorts, and the new generative AI tools appear to be aimed at attracting even more users and creators and gaining a competitive edge over its rivals.

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The company also announced YouTube Create, a mobile app aimed at helping the platform’s creators make video production work easier. The app includes AI-enabled features like editing and trimming, automatic captioning, voiceover capabilities and access to a library of filters and royalty-free music. The app is currently in beta on Android in “select markets,” the company said, and will be free of charge.

Beyond creation, YouTube said it would also provide creators with more tools to get AI-powered insights, help with automatic dubbing of videos and assist with finding music and soundtracks for videos.

© 2023 Bloomberg LP 


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WhatsApp Passkey Support Reportedly Rolling Out to Beta Testers on Android: How It Works

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WhatsApp has begun rolling out support for a new feature that will allow you to log in to your account using the biometric authentication mechanism on your smartphone. The messaging service will soon allow you to create a passkey — a kind of login credential that eliminates the need to use or remember a password — on your device and use it to securely log in to apps and services using the facial recognition or fingerprint scanner on your device.

Feature tracker WABetaInfo spotted the new passkey feature on WhatsApp beta for Android 2.23.20.4 on Tuesday, that is rolling out to beta users. However, not all users who have updated to the latest beta release will have access to the feature, which is reportedly rolling out to a “limited number of beta testers”. Gadgets 360 was unable to access the feature on two different Android smartphones that are both enrolled in the beta program.

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The new Passkeys feature on WhatsApp

Photo Credit: WABetaInfo

The new passkey feature is described as a “simple way to sign in safely” to WhatsApp in a screenshot shared by the feature tracker. This suggests that it could be used to help sign in to other devices via secure authentication on your primary device.

Authenticating using passkeys isn’t a novel concept and the technology is slowly gaining traction online— Google already allows you to log in to a new device by using fingerprint-based biometric authentication for passkeys in place of a password. These passkeys are securely stored on your device and used when biometric authentication is provided.

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The screenshot posted by WABetaInfo also states that WhatsApp will store the passkey in the device’s password manager — for most users, that would be the device’s default password store that is handled by Google with autofill support. The feature is also expected to make its way to iOS, where it is likely to be stored in the iOS Keychain.

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It is currently unclear whether WhatsApp will also support storing passkeys in third-party apps like Bitwarden, 1Password, or Dashlane. We can expect to learn more about how the feature works when it is rolled out to more users in the beta program and the feature is expected to arrive on all smartphones on the stable channel in the future.


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Meta Urged Not to Roll Out End-to-end Encryption on Messenger, Instagram by UK

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Britain urged Meta not to roll out end-to-end encryption on Instagram and Facebook Messenger without safety measures to protect children from sexual abuse after the Online Safety Bill was passed by parliament.

Meta, which already encrypts messages on WhatsApp, plans to implement end-to-end encryption across Messenger and Instagram direct messages, saying the technology re-enforced safety and security.

Britain’s Home Secretary Suella Braverman said she supported strong encryption for online users but it could not come at the expense of children’s safety.

“Meta has failed to provide assurances that they will keep their platforms safe from sickening abusers,” she said. “They must develop appropriate safeguards to sit alongside their plans for end-to-end encryption.”

A Meta spokesperson said: “The overwhelming majority of Brits already rely on apps that use encryption to keep them safe from hackers, fraudsters and criminals.

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“We don’t think people want us reading their private messages so have spent the last five years developing robust safety measures to prevent, detect and combat abuse while maintaining online security.”

It said it would update on Wednesday on the measures it was taking, such as restricting people over 19 from messaging teens who do not follow them and using technology to identify and take action against malicious behaviour.

“As we roll out end-to-end encryption, we expect to continue providing more reports to law enforcement than our peers due to our industry leading work on keeping people safe,” the spokesperson said. 

Social media platforms will face tougher requirements to protect children from accessing harmful content when the Online Safety Bill passed by Parliament on Tuesday becomes law.

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End-to-end encryption is a bone of contention between companies and the government in the new law.

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Messaging platforms led by WhatsApp oppose a provision that they say could force them to break end-to-end encryption.

The government, however, has said the bill does not ban the technology, but instead, it requires companies to take action to stop child abuse and as a last resort develop technology to scan encrypted messages.

Tech companies have said scanning messages and end-to-end encryption are fundamentally incompatible.

© Thomson Reuters 2023


(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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