Leo Varadkar and Mark Zuckerberg had nothing but kind words to say about each other when the pair met at Facebook’s Menlo Park headquarters in Silicon Valley to cement their mutually beneficial relationship.
“Great to meet with Mark Zuckerberg,” Varadkar, the then Irish Taoiseach, said of the 2017 meeting. “100s of extra jobs confirmed for Ireland next year.”
Mr Zuckerberg, meanwhile, declared the meeting an “an honour” in a post on his platform Instagram.
But Dublin’s cosy relationship with Silicon Valley tech giants like Facebook-owner Meta is now under threat. Brussels is pushing Ireland to take a tougher stance on tech giants, lobbying behind the scenes for wide-ranging investigations into how these companies handle data.
Dublin, meanwhile, has accused the EU’s privacy watchdog of “overreach”, with those close to the situation complaining privately that Brussels is seeking to make Ireland poorer simply to appease other member states.
Many other EU countries have long believed Ireland is a soft touch on tech, willing to let major companies off with a slap on the wrist so long as they bring jobs and tax revenues to the country.
That they duly have, with tech companies providing a $50bn (£41.5bn) boost to Ireland’s economy.
“Ireland, by providing a more welcoming environment to tech companies, has significantly benefited from tech investment,” says Matthew Lesh, head of public policy at the Institute of Economic Affairs.
“But the EU’s anti-tech approach – from harsh data protection, competition, and speech regulation through to pressure for higher taxes – risks undermining Ireland’s economy.”
Ireland emerged as Europe’s go-to tech hub in the early 2000s by offering tax breaks and incentives to US tech giants. Its Industrial Development Agency lobbied Silicon Valley companies to set up shop in Dublin, attracting Google’s first international office in 2002.
In the years that followed, tech giants including Facebook, now known as Meta, LinkedIn and Twitter all set up in Dublin’s redeveloped docklands.
More than 100,000 people are now employed by multinational technology companies in Ireland. Around 16pc of Ireland’s gross domestic product now rests on Big Tech’s revenues and taxes, meaning Silicon Valley is arguably more important to the country than Brussels.
There are fears the economic miracle of the “Celtic Tiger” could now be under threat.
One source close to Ireland’s tech sector says divergence from the bloc was “tolerated when Ireland was a poor country” but “once tech companies started to use Ireland, in Europe there was a perception of a ‘beggar thy neighbour’ effect.”
The rift spilled out into the open in the middle of the last decade after the European Commission sued Apple over its tax affairs in Ireland.
Ireland’s tax treatment of US multinationals has been particularly disliked. With a rate of 12.5pc, Dublin has one of Europe’s lowest corporation tax burdens.
iPhone giant Apple secured a bespoke deal on taxes that triggered a backlash from the European Commission. Brussels ordered the company to pay $13bn extra to Dublin in 2016, saying the tax breaks were unfair state aid that distorted the market.
The decision was overruled by a court in Luxembourg. An appeal is expected to be heard this year as the world’s biggest company and the world’s would-be biggest regulator duke it out, with Ireland caught between the two.
The latest split has emerged after an investigation into how Facebook’s parent company Meta handles data.
The Irish Data Protection Commission (DPC) plans to take its EU counterpart to court over claims the bloc tried to pressure it into launching a wide ranging investigation into Facebook’s parent company Meta.
Privacy advocates have accused Ireland’s data regulator of going soft on tech companies.
Max Schrems, the Austrian campaigner who triggered the DPC’s investigation, alleges the Irish regulator “dragged out its decision for four years” and held up to 10 meetings with Facebook in order to “bypass” EU data laws.
Schrems points to documents revealing backroom rows between the two regulators over how to treat Meta after investigators concluded Facebook had broken EU data protection laws.
Helen Dixon, the head of the DPC, proposed fining Meta between €28m and €36m. Her European peers, however, pushed hard for a greater penalty. The final outcome was nearly ten times the DPC’s intended level, at €390m (£345m).
“The position developed by the DPC was not acceptable to many within the sub-group and it became clear there was no possibility of building a consensus around it,” the DPC conceded this week.
Campaigners like Schrems claim Dublin’s pro-business stance is thwarting the EU’s ambition of making Big Tech bow to its authority.
Dublin denies this and Ireland’s data watchdog this week issued a rare rebuke of the bloc, saying it had tried to pressure Dublin into an “open-ended and speculative investigation” of Meta. The regulator decried the effort as “overreach” and will appeal to the EU Court of Justice to quash the attempt.
“Given that regulators themselves disagreed with each other on this issue up until the final stage of these processes in December, it is hard to understand how we can be criticised for the approach we have taken to date,” said Meta, which is appealing the fine.
A source close to the company said divisions between Ireland and the EU created “enormous uncertainty” for tech companies.
The EU remains immensely popular in Ireland, despite more sceptical parties such as Sinn Fein gaining ground. But that has not prompted political leaders to rethink their attitude to Brussels when it comes to tech regulation.
“The perception in Ireland is the EU had its back during Brexit,” says a tech sector source. “There is a sense that Ireland is willing to be a bit of a chancer – to stretch the [EU] rules.”
Whether those rules will stretch far enough to let Ireland keep its business-friendly economic stance is a question that will ultimately be answered in Brussels – either by EU regulators or by EU judges.
Source: https://finance.yahoo.com/news/brussels-trashes-ireland-economic-model-060000862.html