Facebook’s £2.7m Mr Fixit: How Nick Clegg began new lobbying role by telling EU power broker ‘It’s good to have a European and liberal in Silicon Valley’ – and after suggesting the tech giant should pay more tax, he led team to find a way to wriggle out
- Former deputy PM Nick Clegg was hired by Facebook as a global affairs supremo
- He met Irish finance minister Paschal Donohoe to discuss punishing new taxes
- Sales taxes on tech companies were being threatened by European countries
- Facebook wanted to ease its burden in Ireland where half its revnue is declared
- Notes and minutes of the meets form part of a cache of documents into Clegg
The summit in the Californian sunshine could hardly have gone better, judging by the warm note sent by a finance minister to Facebook’s newly appointed global affairs supremo Nick Clegg.
‘Dear Nick, hope early days of role are continuing to go well,’ Ireland’s Paschal Donohoe wrote in the handwritten message. ‘I hope our paths cross again soon.’
The meeting at Facebook’s head office in Silicon Valley was an opportunity for the Irish delegation to meet the man who billionaire founder Mark Zuckerberg hoped would rehabilitate the tech giant’s increasingly tarnished reputation.
Nick Clegg was hired as a global affairs supremo for Facebook who wanted to rehabilitate its tarnished reputation
But for the Facebook bosses, led by Sir Nick – who had taken up his role just three months earlier – it was a chance to address the growing threat to Facebook of punishing new taxes.
Minutes of the meeting obtained by The Mail on Sunday reveal how Facebook sought to cushion the blow of sales taxes on tech companies – which were being threatened by several European countries – by easing its tax burden in Ireland, where the company declared more than half of its £39 billion global revenues.
The revelation is likely to raise eyebrows given that just three years earlier, former Deputy Prime Minister Clegg had criticised Facebook and questioned whether it should be paying more tax.
The note and minutes form part of an extraordinary cache of documents that give a fascinating insight into how Clegg went from the Liberal Democrat leader, who led his party to electoral disaster in 2015, to become one of the world’s top power brokers.
They show how he defended the tech giant following criticism of sickening self-harm images on its platforms and was involved in a lobbying campaign to protect Facebook’s vast profits from the threat of new taxes.
Clegg traded in his £1.5 million townhouse in Putney, South-West London, for a £7 million mansion in the sleepy Californian hamlet of Atherton (pictured)
It comes as Chancellor Rishi Sunak today tells the MoS that he will attempt to broker a deal with US President Joe Biden to slap a tax on the super-profits of tech giants at the G7 meeting in Cornwall next month.
And it follows mounting pressure on Facebook over plans to introduce strong encryption on its messaging apps – a move which will make billions of online messages secret and, according to the head of MI5, give terrorists a ‘free pass’.
Appointed in October 2018 as vice-president for global affairs and communications, Sir Nick commands a reported salary of £2.7 million and has been tasked by Mr Zuckerberg to defend the tech giant’s interests abroad.
How vile child abuse pictures are posted to Facebook every second
More than one child abuse image, video or post is uploaded to Facebook every second, a harrowing report has revealed.
Official documents seen by The Mail on Sunday show the social media giant took down 35.9 million pieces of content relating to child nudity and exploitation last year.
Facebook last night insisted its technology identified and removed ’99 per cent’ of those posts before they were flagged by users.
However, this newspaper understands that the firm does not track who has seen the content or how long it remains online before it is taken down.
It also means as many as 360,000 child abuse posts had to be reported by concerned members of the public before they were removed.
The total number of child abuse images circulating on Facebook could be even higher because it is not known how many go undetected by its technology or its users.
Facebook has previously admitted that it failed to spot vast amounts of dangerous content towards the end of 2020 due to a ‘technical issue’.
Children’s charities criticised the company for doing too little to tackle appalling online content. Andy Burrows, of the NSPCC, said: ‘It’s vital this horrific content is removed as soon as possible. Behind every image is a child who has been sexually abused.’
The horrifying harm being caused to children and teenagers online was revealed in a report buried on the Government website.
The study found that tech firms, which are legally required to report child abuse posts to US authorities, logged almost 70 million such cases in 2019 in total.
Of these, 79,798 related to UK victims or offenders and were passed on to our National Crime Agency. The UK is now set to start collecting its own data on child abuse online.
The report also looked at how children and teenagers can freely access self-harm, suicide and other damaging material on social media sites.
It said YouTube had to remove 1.4 million videos flagged as dangerous by users.
The Government is planning an Online Safety Bill, which will hit social media firms with huge fines if they fail to curb harmful content.
A Facebook spokesman said: ‘Using industry-leading technology, 99 per cent of this content is proactively detected and taken down before it’s reported to us.
‘All of these figures are published regularly so we can be held to account for the progress we’re making on this internet-wide problem.’
Trading in his £1.5 million townhouse in Putney, South-West London, for a £7 million mansion in the sleepy Californian hamlet of Atherton, Clegg has embraced the Silicon Valley lifestyle.
Neighbours include tech titans Eric Schmidt, former head of Google, and Sheryl Sandberg, Facebook’s chief operating officer.
Soon after Clegg’s appointment, he launched a charm offensive to win over key power brokers in Brussels. In fact, he held at least 12 meetings with European Commissioners – the EU’s most powerful officials – in less than three years.
The day after his appointment was announced, he emailed Margrethe Vestager, a Danish politician and the then European Commissioner for competition.
‘I know you have reservations about social media, and perhaps FB in particular, but I hope you’d agree it’s good to have a European and a liberal in the heart of Silicon Valley!’ he wrote. A senior figure in Brussels, Ms Vestager has taken on the biggest technology companies in the world, including Facebook, which she fined €110 million (£96.5 million) for being opaque about its takeover of WhatsApp.
It should also perhaps have been no surprise that one of Clegg’s early key meetings at Facebook’s headquarters near San Francisco was with Irish politicians and officials.
Ireland plays a critical role for Facebook as it employs 5,500 people there and its Dublin office is one of the biggest of the company’s locations outside of California.
Perhaps more importantly, Ireland’s generous tax regime, and the complex way Facebook’s business empire is structured, have allowed it to avoid paying billions of pounds in tax in other countries.
In 2018, one of Facebook’s holding companies in Ireland recorded revenues of £21 billion, more than half of the company’s total global turnover of £39 billion.
That same year, Facebook’s main Irish subsidiary paid £75 million in tax while recording profits of more than £10 billion – equivalent to just 0.8 per cent.
But while Ireland has been keen to offer Facebook financial incentives, other European countries, including the UK, have grown increasingly frustrated at how little the company pays in tax.
Around half of European countries have either proposed or implemented new taxes on technology firms, with the UK Government last April imposing a 2 per cent tax on the revenue that internet companies gain from British users.
Under such a system, Facebook can be taxed twice on the same revenue in two different countries.
Minutes of the meeting in California in January 2019 – marked confidential – reveal how Facebook lobbied to ease its tax burden in Ireland to offset the hundreds of millions of pounds it faced paying out as other EU countries imposed new taxes.
‘Facebook raised an issue with regard to whether payment of national digital sales taxes in some jurisdictions through its Irish subsidiary could be offset against Irish tax,’ the minutes state.
Facebook has since wound up the key Irish holding company, and two others, amid criticism that it was shifting profits to Ireland to avoid tax.
In 2016, Clegg criticised Facebook and suggested the company should be paying more tax.
‘I’m not especially bedazzled by Facebook,’ he wrote in the London Evening Standard.
‘While I have good friends who work at the company, I actually find the messianic Californian new-worldy-touchy-feely culture of Facebook a little grating.
‘Nor am I sure that companies such as Facebook really pay all the tax they could – though that’s as much the fault of governments who still haven’t got their tax act together.’
Neighbours include tech titans Eric Schmidt, former head of Google, and Sheryl Sandberg, Facebook’s chief operating officer
Former Cabinet Minister David Jones highlighted how in 2017 Clegg also told The Times that companies such as Facebook were ‘flagrantly, blatantly on the wrong side’ on tax and should pay up.
He added: ‘Clegg should explain why what was wrong in 2017 was OK just two short years later.’
Facebook last night said the Irish delegation had requested the meeting and it was the tech firm’s finance team, not Sir Nick, who raised the issue of tax.
A spokesman added that Clegg has ‘been clear that tech companies should be prepared to pay more tax in Europe, which is why Facebook has backed new international tax rules for the digital economy’. ‘He has argued very publicly that these much-needed reforms can only succeed if they’re done globally, rather than through a patchwork of unilateral action by individual countries.’
The documents also reveal how just five days later Sir Nick hosted a cocktail party in the Swiss ski resort of Davos in a bid to woo EU officials responsible for regulating big tech.
The party on January 24, 2019, came the day after a devastated father accused Facebook of helping his teenage daughter kill herself.
Speaking publicly for the first time since his 14-year-old daughter Molly died in 2017, Ian Russell told the BBC that she had taken her own life after looking at pictures on Instagram, which is owned by Facebook, that glorified self-harm and suicide.
The next day, Facebook hosted the world’s business and political elite at a venue opposite Davos’s Grand Hotel Belvedere to discuss ‘the responsibility and action’ the firm was taking to tackle ‘the biggest challenges of the digital age’.
When asked about Molly’s death four days after the Davos conference, Clegg told the BBC: ‘I can tell you firstly we’re going to look at this from top to bottom, change everything we’re doing if necessary, to get it right.’
The files also reveal how Clegg defended Facebook after it blocked access in Australia to media pages on its website in a row about paying for news. The tech giant prevented its 17 million Australian users from sharing news or accessing pages for more than a week in retaliation against legislation to make it and other tech companies pay for journalism.
In an email to Ms Vestager on March 1 this year, Sir Nick defended Facebook over the storm and said claims the company stole journalism ‘always were and remain false’.
In other emails, Clegg defended Facebook against allegations that it hosts horrifying self-harm and suicide images. In a message to Ms Vestager on March 11, 2020, he said he wanted to address a ‘Danish documentary you mentioned regarding Instagram and suicide and self-injury content’. He insisted that the tech giant did not allow the promotion of self-injury and suicide and ‘some of the images shown in the piece were against our policies, and we removed them’.
Clegg claimed Facebook had ‘new machine learning technology’ to find such images.
He has also sought to influence MEPs, the documents reveal. Emails obtained from the US Trade Representative, a US government agency, indicate that Clegg claimed he was meeting MEPs to ‘advise’ them on tech regulation.
Robert Gerber, a director at the agency, emailed a group of colleagues: ‘In fact, he said he has been leading sessions with MEPs in Brussels to advise them on the development of regulations.’
One replied: ‘Sounds like Clegg knows his stuff.’
Last night Facebook said: ‘Facebook and Nick Clegg have spent the last few years vocally calling for regulation of the internet, so it should be no surprise that he meets with regulators.
‘As vice-president for global affairs at Facebook, Nick also regularly makes himself available to outside interests – including publishers – seeking to pursue their own commercial interests on social media.’
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