Facebook Inc. (NASDAQ:FB), despite its perceived failures as a publicly traded company, is one of the great American success stories – from a college dorm room to a $40 billion company in less than a decade. CEO Mark Zuckerberg is considered one of the bright young tech innovators in the world and has built himself quite a social-media network. But does that success make Facebook Inc. (FB) a target for governments? Are some of the run-ins with various government entities (including courtrooms) world wide legitimate, or are they rooted in jealousy of the company’s success?
One blogger recently wrote a piece that addressed a couple of recent charges against Facebook Inc. (NASDAQ:FB) and made the case that these complaints might be unfounded in reality. The first example came from the European Union, where some were claiming that the company was dodging its tax bill. This charge surfaced when it was revealed that Facebook Inc. (NASDAQ:FB) paid just 238,000 pounds in taxes to the U. K. government out of 175 million pounds of revenue. UK Labor Minister John Mann said, “they benefit enormously from the country’s Internet infrastructure but do nothing to fund it.”
Except, there is an EU law that states that a business like Facebook Inc. (NASDAQ:FB) only needs to have an office in one of the 27 EU countries and pay taxes only in that country in order to fund the entire “single market.” The country Facebook Inc. (FB) works from? Ireland, which has the lowest corporate tax rate in the EU.
A second mention of Facebook Inc. (NASDAQ:FB) being targeted comes from New Zealand, where a local tech firm called Profile is dragging Facebook into court on a breach of contract charge. According to the lawsuit filing documents, Profile had made a deal with Facebook Inc. (NASDAQ:FB) in 2007 to create a social-specific search engine regarding the public portions of Facebook user profiles. Three years later, Facebook pulled the plug on the arrangement, claimed there was no contract and went on a “smear” campaign against the company.
While the first case is meritless that Facebook Inc. (NASDAQ:FB) is actually shirking its tax responsibilities, the second case is a little bit shady and uncertain. It will likely have to be worked out in the courts, though Facebook Inc. (NASDAQ:FB) maintains that there is no contract and that the lawsuit has “no merit.”
How much of this is legitimate, and how much is jealousy of success? Does this affect investors – like billionaire fund manager George Soros of Soros Fund Management – in terms of their perception of a company like Facebook Inc. (FB)?