With conflict flaring over censorship of Twitter in Turkey around the time of March elections, the Turkish government has reportedly demanded that the company open an office there. Tim Worstall over at PandoDaily writes:
Why not just stick one employee there, as an “office” and make the local government happy? The answer being that having an office in a country changes the tax position completely and the important phrase to understand here for non-accounting types is “permanent establishment.”
Tim rightly points out that taxation of Internet businesses that flow across porous international borders is a thorny subject. The largest, most successful social Internet companies are understandable targets for tax authorities. Nevertheless, in the case of countries like Turkey under authoritarian leader Recep Tayyip Erdoğan, I think the discussion of taxes is mostly political theater. The main issue for social platforms like Twitter in Turkey in my opinion is free speech, or rather the desire to manage and squash it.
As a seasoned Internet lawyer who’s served as GC and in other in-house counsel roles advising Trust & Safety teams at social Internet companies including MySpace and eHarmony, I can tell you why I wouldn’t want an office in Erdoğan‘s Turkey (or certain other countries): Twitter is the middleman for a vast amount of free speech, much of which certain governments will dislike. What do you do when the authorities come knocking with a demand to take down content critical of the Erdoğan regime, turn over electronic records or grant real-time access to data that may well lead to them imprisoning, torturing and/or executing a whistleblower or dissident? You have two choices: Be complicit or refuse. If you refuse, as the person(s) on the ground in Turkey, you face a very real risk of being arrested for some crime or other and thrown in, uh, Turkish prison. (And you thought the NSA was bad?!)
This is not a joke. It’s all very well to pontificate about universal values and human rights in a comfy conference room at an EFF symposium, but if your butt is in that chair in that office when government agents saunter in with machine guns, things get real in a hurry. An employee of Facebook or Google or Twitter in Turkey enjoys no special status: A corporate office is on foreign soil, not an embassy; they aren’t government officials, so diplomatic immunity doesn’t apply. As a business enterprise they aren’t even sheltered by the voluntary restraint most countries (though certainly not all) customarily show with NGOs and journalists.
Pragmatically, a company that does business in a foreign country does so on its terms, full stop. The unique, world-changing thing about the global Internet is that you can do business with millions of people in a country like Erdoğan‘s Turkey without actually being in Turkey. That circumvents the grip authoritarian and totalitarian governments have on bricks-and-mortar businesses to coerce them into doing just about anything. Without a physical presence there, the worst thing a hostile government can do is try to block access to data networks (e.g., the Great Firewall of China).
I have no inside knowledge of the goings-on at Twitter, so the foregoing is just a theory on my part. I can say that if I were back at eHarmony — or GC at any other Internet company with millions of users — and my CEO wanted to have a chat about opening an office in Turkey under Erdoğan (or any illiberal, authoritarian state without solid free speech protections), this would be how I framed the discussion: Are you willing to have the company serve as a tool of a repressive regime, in deference to local law or fiat, regardless of how forcefully we might disagree with it in substance? If not, better to stay outside its borders and continue fighting the long war with electrons.
