If a company takes VC investment to invest in free signups, the VCs are clearly expecting these signups to be a revenue-generating. That they aren’t treated as revenue for taxation purposes is quite the loophole when one’s core business model hinges on free signups. If U.S. companies adhered to VAT principles then instead of taxing signups, they could just tax the value added by Facebook and assign it by citizenship of the users.

How much sales tax are Facebook customers paying on their metadata purchases today? What component of that sale price or sales tax are being distributed back to the users or jurisdictions whose data was harvested? Is that a just economic outcome for everyone that isn’t Facebook?

I don’t know what the right answer is here, but I absolutely recognize the plausibility of the sort of claim being leveled here — even if tech would rather not.

(Personally, I am looking forward to someone someday making a courtroom argument that providing free access to Facebook services without declaring a value, and without offering payment as an alternative to unwanted services, is equivalent to valuing access those services at $0 and so back pay is owed their users-as-contractors. No one’s had the courage yet, but it’s nice to see we’re moving in the direction that might produce such outcomes.)