Ireland signs on to landmark global corporate tax deal

This is an audio transcript of the FT News Briefing podcast episode: Ireland signs on to landmark global corporate tax deal

Marc Filippino
Good morning from the Financial Times. Today is Friday, October 8th, and this is your FT News Briefing.

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Ireland agreed to bump up its famously low corporate tax rate for the sake of a global deal. And what the heck went on in energy markets this week? Katie Martin will give us the details. Plus, Facebook whistleblower Frances Haugen testified before US Congress about how the company puts profits ahead of user safety. She also claimed Facebook skews some of its metrics to make its user base look bigger.

Elaine Moore
Those numbers are being presented to advertisers, while the company also acknowledges that up to 16 per cent of the total outstanding user base could be made up of duplicate accounts or false accounts.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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Two words were all that’s been holding Ireland back from agreeing to an increase in the global corporate tax rate ahead of an OECD meeting today. Ireland didn’t want to raise its cherished 12 and a half per cent corporate tax to at least 15 per cent, but they relented yesterday when dealmakers changed the wording.

Jude Webber
They struck out the words “at least”. And so Ireland has now decided that, well, yes, it can sign. And this is the deal now that that’s going to be, I imagine, agreed at the OECD’s meeting today in Paris.

Marc Filippino
That’s the FT’s Ireland correspondent Jude Webber. While there are still some holdouts in Europe like Hungary, she says now the biggest holdout could be in the US.

Jude Webber
And this is the problem because obviously Joe Biden wants this, Janet Yellen wants this, but it has to get through Congress, and Biden only has a very tiny majority in the Senate. So it’s not very clear yet whether that’s in the bank. But what some Minister Paschal Donohoe has said every country would come on board to be able to bring Ireland into the agreement at this moment. So basically, he thinks that it’s, you know, everybody will do this, you know, come come round this rally around this together. And he was, you know, fairly optimistic. But obviously that’s coming further down the line. And it’s important to note as well that even though today’s meeting is going to agree this, and that’s a landmark moment, a lot of the fine print still has to be hammered out. And that could take several months.

Marc Filippino
That’s the FT’s Ireland correspondent Jude Webber.

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It was a crazy week for energy prices. Gas prices soared and then tumbled after the intervention of none other than Russia’s President Vladimir Putin. To talk about what’s been going on, I’m joined by our markets editor, Katie Martin. Hey there, Katie.

Katie Martin
Hey, how you doing?

Marc Filippino
I’m good. Now, what do you think investors make of Putin’s offer to stabilise markets with more supply?

Katie Martin
Well, markets certainly appear to have taken President Putin at his word. Whether it’s good ideas, take that at face value or not is a whole other question, but the markets certainly did. And so the UK natural gas price, for example, which was up 40 per cent at one stage in the day, ended up down 40 per cent by the end of the day. So it was quite a ride for energy traders. But to be clear, we, you know, we ended up down nine per cent on the day. We’re still at extremely elevated prices for gas in the UK, but nonetheless, it’s clear that people think that Putin is potentially the answer here.

Marc Filippino
And there are all kinds of other things going on as well. All comments from other political leaders, of course, OPEC saying it wouldn’t open the taps any faster. How does this all play into what’s going on, Katie?

Katie Martin
As you say, there’s a lot of different factors here, and it’s very difficult to control the price, you know. The price is elevated because a bunch of things that aren’t all necessarily controllable by policymakers. There’s things like the recovery from Covid. There’s things like the lack of wind in the UK. I mean, who knew that was a thing? But no one can make the wind blow harder and give us more wind energy. So in the meantime, you know, gas has to step up with Russia. You know, it says that it’s fulfilling all of its long-term contracts. But there is a suspicion among traders in the market that Russia could be doing a lot more. The International Energy Agency told us that, you know, it’s aware that Russia has got more capacity that that it could be using. So I guess the question is if Russia has the ability to push more gas into the market, why isn’t it doing it already? And the theory that’s out there is this has something to do with the Nord Stream 2 pipeline that Russia wants to get approved. It’s trying to force that issue by being a little bit stingy with the amount of extra gas that it allows into the system. Now, Russia would push back at that accusation, but these are the kind of geopolitics that feed into this very messy situation.

Marc Filippino
So zooming out a bit, how does all of this factor into fears and this new discussion of stagflation?

Katie Martin
So stagflation is where you have economic growth, either slow down or stop or even go into reverse while inflation is kicking higher. It’s a pretty toxic combination because all things being equal, inflation would push central banks into raising interest rates. But central banks don’t really want to do that when economies are slowing down. So it’s a really tricky equation, if you like. But it’s clear that at the very least, the what’s been happening with the gas price is feeding through to inflation expectations. We have seen a pickup in government bond yields pretty much globally over the past few days, at least in part because of what’s going on with the gas price. It is a sign that investors think that the inflation that we all thought back in January February would be temporary, be transitory. As as the central banks like to say, let’s not worry about it. This is just a series of one-offs. Now there’s very much a recent going-on where investors are kind of looking around the room and thinking, hang on, I don’t like the look of this. I don’t think I understand how it’s going to to pan out. And so there’s a huge amount of uncertainty and there is it is nibbling away at markets.

Marc Filippino
Katie Martin is the FT’s markets editor. Thanks, Katie.

Katie Martin
Pleasure.

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Marc Filippino
Of all the assertions we’ve heard in recent days about Facebook, few are really surprising. We’ve heard the social media site spreads hate and misinformation. We’ve heard critics say it values clicks and profits over users’ wellbeing. But one allegation stands out. Our Lex columnist Elaine Moore was struck by whistleblower Frances Haugen’s report to regulators that Facebook misled investors and advertisers about its user numbers.

Elaine Moore
There were two things that she said that were particularly interesting. The first is about young users, and she says that Facebook has internal statistics that show that in America, in particular, young people are just not joining Facebook in the numbers that they used to. And that kind of decline is a real worry because that group is the group that advertisers want to get in front of. The thing about that number, though, is that we don’t think it applies to all of Facebook’s products. So possibly it doesn’t include Instagram. And Instagram has more cachet with young users anyway, so advertisers could be moving money from Facebook to Instagram, but it all goes in the same pot. The second thing that she said was she pointed out that Facebook’s own metrics are flawed on the number of users that it has, the reach that it has, and that those numbers are being presented to advertisers. While the company also acknowledges in its financial reporting that up to 16 per cent of the total outstanding user base could be made up of duplicate accounts or false accounts. And that makes a gigantic difference to all kinds of important numbers. And yet Facebook keeps on promoting this larger number that doesn’t take into account these potential dodgy accounts.

Marc Filippino
How is this not cooking the books, Elaine? Or, you know, rather, misleading investors?

Elaine Moore
Because Facebook is completely transparent about it, it’s not hiding this at all. It’s just that advertisers, and to a certain extent, investors, don’t seem to care that much. Maybe that’s because everything to do with Facebook is so gigantic. We’re talking about billions of users and billions of dollars going into the company. And so for the advertisers, at least, they appear to think, well, 16 per cent of potential accounts might be fake or they might be duplicates but there’s enough accounts out there that are real that we’re getting in front of, so we’re happy about that. But the thing about this is that it makes a real difference to all sorts of other numbers, and those numbers are used by investors to compare one company to another. And one in particular is average revenue per user. It’s kind of one of the most important numbers when you’re looking at a social media company. And for Facebook that number moves all over the place, depending on which figure you’re using for the total users

Marc Filippino
And you know who you haven’t really seen much of in this whole process? CEO Mark Zuckerberg. Should he be worried about his job?

Elaine Moore
I think it’s really interesting that he hasn’t really come out in front and talked about this whistleblower. So he hasn’t been the person that’s been rebuffing the claims. That’s been down to Nick Clegg, who’s one of the spokespeople for Facebook. So I wonder if at a certain point, Mark Zuckerberg will just take charge and he will come in and he will try to explain the company’s point of view. But I don’t think he’s worried about his job. He holds the majority of the company’s voting power, and shareholders believe that there is a lot more value that he can unlock from Facebook’s gigantic user base. They believe that he has these ideas for more products, more services that will generate a lot more money to come. And I don’t think that they are willing to unseat him just yet.

Marc Filippino
Elaine Moore is the deputy head of the FT’s Lex column Thanks, Elaine.

Elaine Moore
Thanks.

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Marc Filippino
Before we go. The sound of Newcastle United fans. They’re cheering on a new era for their soccer team. Yesterday, an investment group led by Saudi Arabia’s sovereign wealth fund completed a £305m acquisition of the English Football Club. It overcame human rights and piracy concerns and is now the latest Middle Eastern owner in the world’s favourite sport.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back next week for the latest business news. The FT News Briefing is produced by Fiona Symon and me, Marc Filippino. Our editor is Jess Smith. We had help this week from Peter Barber, Gavin Kallmann and Michael Bruning. Our theme song is by Metaphor Music.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.