Chasing development: give big tax breaks to Foxconn, then to Microsoft…

American municipalities want growth and jobs. Hence, they give tax breaks to corporations to locate there. In southern Wisconsin, they first gave big money to Foxconn. When that fell through, now they are giving money to Microsoft:

Photo by Jonathan Borba on

Taiwan-based Foxconn Technology Group forged an agreement in 2017 with former Gov. Scott Walker to manufacture LCD screens in Mount Pleasant, investing $10 billion and employing 13,000, in return for billions in subsidies. But the company, a top manufacturer of Apple’s iPhones, downsized its plans and created few jobs, forcing government officials to find other users.

Data centers process and store huge volumes of computer data, forming the backbone of the internet. Although these facilities typically don’t create large numbers of permanent jobs, local leaders and tech experts say Microsoft’s arrival signals the Foxconn land, along with infrastructure improvements already complete, won’t go to waste…

Residents on the land promised to Foxconn were displaced from their homes, but the company, blaming “unanticipated market fluctuations,” canceled the mega-factory. In 2021, it signed a new deal with Gov. Tony Evers, who beat Walker after criticizing the original agreement. Instead of up to $3 billion in subsidies, Foxconn agreed to collect $80 million for creating 1,454 jobs and investing $676 million in a set of smaller facilities by 2026.

Microsoft’s agreement with Mount Pleasant and Racine County requires it to launch construction by 2026. The company can recover 42% of its property taxes, but no more than $5 million per year. The local governments can also repurchase the land at the same price if Microsoft fails to hit the deadline.

The logic for this is provided in the story. Attracting big companies and jobs is viewed as important. If growth does not come here, it will go to other communities who will benefit. The deal with Foxconn fell through but having some deal and a few jobs is better than nothing. Growth must continue as must the tax breaks.

Do they really have to continue in this fashion? The final paragraphs hint at one of the possible motivating factors for these companies locating in southern Wisconsin: they are just over the Illinois border and can service the Chicagoland region. If Chicago area municipalities will not compete with each other in these same ways, just go over the border and find plenteous tax breaks. Another motivating factor seems to be a fixation on big companies and tech companies. What community would not want to boost they have a Microsoft facility (even if it is just a data center)?

I hope some people keep following up this story and similar ones to find out what communities and residents actually get out of these tax break deals. How much is spent per job? How does the business growth help the community? What does a data center contribute to a community? Years down the road, who benefits the most from these deals?

Linking Microsoft giving $500 million for Seattle area housing to tech companies and declining gov’t support for housing

Microsoft is pledging a substantial amount to address the important issue of housing in Seattle:

Microsoft plans to lend $225 million at subsidized rates to preserve and build middle-income housing in six cities near its Redmond headquarters. It will put an additional $250 million into low-income housing across the region. Some of those loans may be made through the federal programs that provide tax breaks for low-income housing.

The company plans to invest the money within three years, and expects most of it to go to Seattle’s suburbs.

The loans could go to private or nonprofit developers, or to governmental groups like the King County Housing Authority. As the loans are repaid, Mr. Smith said, Microsoft plans to lend the money out again to support additional projects.

This article frames the giving as part of the housing issues wrought by the actions of tech companies:

Microsoft’s money represents the most ambitious effort by a tech company to directly address the inequality that has spread in areas where the industry is concentrated, particularly on the West Coast. It will fund construction for homes affordable not only to the company’s own non-tech workers, but also for teachers, firefighters and other middle- and low-income residents.

From this point of view, the health of a region matters for companies. If workers, whether ones employed by a particular company or organization or others, cannot find affordable housing, it will be harder for the region to find and hold on to workers. Whereas businesses often focus on a good business climate (low taxes, tax breaks, business-friendly governments, etc.), housing is a big factor in finding a strong work force. Additionally, Microsoft can help show through these actions that they care about local conditions in ways that tech companies are often said to ignore because of their global status. Would Microsoft be the same if it were not in the Seattle region?

Another way to view this is that private companies are now taking on what the federal government should address:

The government spent about three times as much on housing programs in the 1970s as it does today, according to the National Low Income Housing Coalition. In the years since, the government has gotten out of the business of building public housing. And capital funds to repair the remaining public housing stock have been cut in half over the last 15 years.

Over this time, federal resources have increasingly shifted away from subsidizing the construction of affordable housing to subsidizing renters who find housing in the private market. And now most new below-market-rate housing is built not by public agencies, but by nonprofit developers leveraging tax credits. The value of those credits has declined recently as well, as a result of changes in the tax bill passed in 2017.

In a sense, Microsoft’s proposal is an extension of this story, as private actors continue to step in where the government once stood.

Ed Goetz, a professor at the University of Minnesota who has studied the history of public housing in America, said: “I don’t want to diminish the magnitude of what they’re doing. I think it’s important, and it will help. But it won’t solve Seattle’s problem.”

This argument suggests that private actors can only do so much to address housing issues. Because so much money is involved and the issue is so widespread, even $500 million may not do much in a single metropolitan region with high land and housing costs. Of course, the government is involved in the housing industry: the federal government for decades has supported single-family homes, primarily in the suburbs. At the same time, the government and the American people have always been more ambivalent about public housing. It is not as if  the housing market is a free market: the United States subsidizes mortgages.

At the least, this will be an interesting experiment: can Microsoft make even a small dent in the housing needs of the Seattle area? Will this help strengthen the metropolitan region or primarily serve as good publicity for the company?

Microsoft hoping to sell lots of political ads on XBox Live, video games

Ads in video games are not new but Microsoft is looking to use more recent technology and information to sell political ads in its online spaces:

Microsoft is trying to persuade politicians to take out targeted ads on Xbox Live, Skype, MSN and other company platforms as midterm elections begin heating up around the country. To plug the idea, Microsoft officials handed out promotional materials Thursday at CPAC, the annual conference for conservatives.

It’s the latest move by tech companies to seize a piece of the lucrative political ad market. The ads, which would appear on the Xbox Live dashboard and other Microsoft products, combine Microsoft user IDs and other public data to build a profile of Xbox users. Campaigns can then blast ads to selected demographic categories, or to specific congressional districts. And if the campaign brings its own list of voter e-mail addresses, Microsoft can match the additional data with individual customer accounts for even more accurate voter targeting.

The image of white male teens as the stereotypical average gamer is something of a myth; Microsoft says that of its 25 million Xbox Live subscribers in the United States, 38 percent are women. Forty percent are married, and more than half have children. Those numbers are important, because they represent key demographics that are among the most contested in political races. Microsoft is particularly aggressive in selling its ability to reach women, Latinos and millennials; across the company’s other platforms, such as MSN, Microsoft has developed consumer categories like “Ciudad Strivers” and “Nuevo Horizons” that attempt to describe a set of characteristics including age, type of residence and income level. At a time when virtually all politicians are resorting to microtargeting, this technology could help Microsoft become a major player in the advertising space…

Microsoft has made successful pitches to political campaigns before. In 2012, President Obama agreed to advertise on Xbox Live for his reelection campaign. The effort sparked some complaints among Xbox users who disliked the ad appearing on their dashboards. Republican presidential candidate Mitt Romney, meanwhile, opted not to participate. Obama has also advertised within games themselves. With the release last year of the Xbox One, it’s safe to expect Xbox Live to become another important platform in the political ad wars.

It will be interesting to see how users respond and then how effective such ads are. This shouldn’t be much of a surprise to users: we shouldn’t be surprised if we volunteer data online and then it is used for targeted ads. Plus, given the time people spend playing video games (particularly for demographics that might not be accessing more traditional media as much), this seems like a relatively untapped market compared to television. Yet, it is harder to argue this has many benefits for users. While some might argue targeted ads for consumer goods show people what they might want, what average XBox Live user wants to be presented with political content while trying to play a game?

USA Today in an updated version of “the home of the future”

USA Today takes a long look at “the home of the future”:

On Microsoft’s sprawling, rustic campus, this home is a maze of futuristic rooms, a digital kitchen and interactive walls. Recipes are projected onto the kitchen counter, children can play video games from a table’s surface, and bedrooms have interactive wall posters that can be changed daily, based on the occupant’s mood.

No one lives there, but it is a template for the future. Indeed, many houses throughout the USA already have hints of Microsoft’s model home. Might this be a working blueprint for better things, of a life that just decades ago seemed possible only in the world of science fiction?

What once seemed conceivable only on The Jetsons is a real prospect in the next few years. If you’ve heard these utopian and futuristic promises before, only to be disappointed, this story is for you. Because as Americans embrace 2013 and the new year that is upon us, know this: The future of American homes is now.

The rise of intelligent devices, ongoing breakthroughs in robotics, cloud computing and other newfangled technology promise to usher in a new phase in luxuriant and wired home living. Hyperbole of years past has quickly melted away as a pantheon of tech titans — ranging from Apple and Google to Samsung and Microsoft — vie for home-field advantage. Home increasingly is where billions of dollars are expected to be spent on technology as consumers nest in their living rooms and bedrooms on smartphones, tablets and gaming consoles.

I remain skeptical that most Americans will be living in fully wired homes in the near future. In contrast, people with lots of money who can afford new big homes and all of the work that goes into making new homes completely Internet friendly can already do all the article suggests.

It is also intriguing that big tech companies are interested in branding their own homes. Want to live in a Google subdivision? How about an Apple cul-de-sac? Actually, the typical Google or Apple fan would probably rather live in a trendy condo in a New Urbanist neighborhood. Perhaps Microsoft could corner the suburban market…or maybe Samsung?

Microsoft promo videos feature a preponderence of McMansions?

In the middle of a “Xbox music preview,” Paul Thurrot makes an interesting observation about the homes shown in Microsoft promotional videos:

A promotional video then ensued. It was loud and peppy and featured the same overly-white, McMansion-living trendy families that always seem to exist in Microsoft’s promo videos since this is the only life that Microsoft employees in Redmond area understand. But it reveals a few interesting clues about how the Zune Music service will be changing and evolving as it becomes Xbox Music…

I don’t know how accurate this observation is as I don’t regularly watch tech industry promo videos. However, let’s assume it is true. Perhaps McMansion owners are more likely to purchase Microsoft products so Microsoft is simply portraying its target demographic. Perhaps Microsoft critics would love to tie Microsoft to McMansions and put together ideas that Microsoft simply mass produces products that don’t work well in the long run.

What are particular companies or perhaps products that would work well in advertisements with McMansions? A few ideas:

1. McDonald’s. An easy connection: mass production, supersizing, quantity over quality. Both have their enthusiastic detractors. Both seem to continue on anyhow (see this recent piece about a recent jump in sales of McMansions).

2. SUVs. These are commonly put together as symbols of excess and environmental waste. A Hummer would work well here. But what about a Honda CR-V or a Toyota Rav4?

3. Home Depot or any other big box home improvement store. Your mass produced McMansion is falling apart after five years or you need materials for a big brick fireplace on your 300 square foot patio? Save money and buy whatever you need here.

Contrast this with companies that might rather drop dead than be caught advertising with McMansions. Apple: not exactly the image they are trying to portray. Ikea tends to go with smaller spaces. Trendy companies as well as green products likely want to avoid being tied to McMansions.

New Microsoft lab in New York City to study social media and social science

Microsoft is opening up a new laboratory in New York City that will focus on the intersection of social media and social science:

Microsoft Research is opening a new lab in New York City, headed by ex-Yahoo senior scientists. The star crop of researchers includes sociologist and network theorist Duncan Watts, computational scientist David Pennock, and machine learning expert John Langford…

Microsoft’s research hubs are behind several of the company’s successful products. The Kinect and Bing were both developed for years as research projects before Microsoft turned them into products…

The NYC lab recruits bring in mathematical and computation tools that could work magic with existing social media research already underway at Microsoft Research, led by folks like Gen-fluxer danah boyd. “I would say that the highly simplified version of what happens is that data scientists do patterns and ethnographers tell stories,” boyd tells Fast Company. While Microsoft Research New England has strengths in qualitative social science, empirical economics, machine learning, and mathematics, “We’ve long noted the need for data science types who can bridge between us,” boyd explained in a blog post announcing the NYC labs.

Data available via social networks like Twitter and Facebook finally offer a discrete measure of how people interact with one another, and how influence flows through their web of social links. As Watts explains it: “We want to understand how these phenomena work, we have to take a very large scale view of the world but have to refine our viewing a very fine grained way.”

Microsoft has hired 15 founding members (8 of those names are public), but that number is likely to grow in the coming months “like a university department in good times,” Chayes said. (Microsoft Research’s other units vary in size from 40 to 400 members of staff). The lab will draw on collaborators at the University of Pennsylvania, Rutgers, Princeton, New York University, and Columbia who’ve expressed an interest in working with the NYC labs.

This sounds like a fascinating opportunity to bring together a number of notable researchers across disciplines to tackle new issues and data.

I wonder how many academics would bristle at this news simply because of the connection to Microsoft, the supposedly big bad company that has tried to force its way in the computing world and is seen less favorably than “cooler” firms like Yahoo, Google, and Apple. At the same time, it is only with the resources available at these sorts of companies that you could put together labs like this and grant employees (Google is particularly famous for this) time to do their own creative work. How much of the work in this lab will be expected to be funneled into Microsoft products versus the general world of academia? Well-known researchers like danah boyd and Duncan Watts have made it work in the past but how different is it to work for a corporation versus an academic institution? I assume there must be some nice perks, including salary…

“Facebook as McMansion”

Amidst the conversation and consternation regarding Facebook’s recent purchase of Instagram, one commentator makes this comparison: “Facebook as McMansion.”

In the flurry of blog posts, tweets and status updates about the Instagram deal, Facebook was likened to Dr. Evil, Foxconn, the North Korean army, and the Evil Empire — precisely the same nickname given to Microsoft in its monopoly phase.

In his (incredibly fun) take on the acquisition for New York magazine, Paul Ford suggested that Facebook buying Instagram was “like if Coldplay acquired Dirty Projectors, or a Gang of Four reunion was sponsored by Foxconn.” He also called Facebook the “great alien presence that just hovers over our cities, year after year, as we wait and fear,” and likened it to the “monolith in the movie 2001.” Big and scary.

According to BuzzFeed’s Matt Buchanan, “beloathed” Facebook’s purchase of “beloved” Instagram means “the neighborhood just got demolished by giant bulldozers loaded with money and is being paved over with 800 million McMansions.” Facebook as McMansion — a symbol for complacent corporate culture and stodginess if there ever was one…

We love an underdog, and we’d probably love Facebook more if we thought it were one. While snapping up Instagram allowed Facebook do to away with a competitor, it may be that a rival — or even the illusion of one — is exactly what it now needs.

While the other comparisons aren’t exactly flattering, the comparison to a McMansion is not a good thing for Facebook. Although the term McMansion has multiple meanings, it is clearly a negative label and is tied to these ideas: excessively large, much larger than “average homes,” and a one size fits all approach.

Perhaps these comparisons are getting at a larger issue: is there a point when Facebook plateaus or continuously encounters widespread pushback because it is too big and/or too popular? There will always be a small group of people who dislike the dominant company or product just because it is the biggest and can throw its weight around. At the same time, there could be competitors who arise or circumstances online and with computers that change in such a way that Facebook is left behind. See the case of Microsoft who still has a lot of products and influence certainly its way past its peak.

Secondary liability, approaching the limit

The Seattle Times reported a few weeks ago that Microsoft “is pushing Washington legislators to pass a law making it illegal for manufacturers that use pirated software to sell goods in the state”:

The proposed legislation would create a legal cause of action by making manufacturing companies liable for damages, and it would give the state attorney general and companies the right to pursue injunctions in civil court to stop the manufacturers’ goods from being sold.

For example, if a large Washington store sold T-shirts made from a company in China and the Chinese company uses pirated copies of Excel at an office in Shenzhen, Microsoft could seek an injunction to prevent the manufacturer from supplying T-shirts to be sold in Washington state.

This represents a sweeping change to current intellectual property law. It is one thing to grant monopolies via copyright for “limited Times” in order “To promote the Progress of Science and useful Arts”. It is another thing entirely to extend copyright’s monopoly over physical objects alleged to have been manufactured in another country with the help of pirated software and thus to hold the buyers of those physical objects legally responsible.

To put it concretely:  this isn’t holding the buyers of obviously stolen TV’s out of the back of a pickup truck legally responsible for their purchases.  This is holding GM, maker of that pickup truck, legally responsible because the Chinese manufacturer of one of the parts in the truck’s engine used a pirated copy of Microsoft Outlook to receive emailed purchase orders from GM.

Now that’s secondary liability.

Hat tip to Groklaw, where I ran across this story earlier today.  If you’d like to read more about this, Pamela Jones has written rather extensive commentary, including a hypothesis Microsoft is pushing for this and similar laws in other U.S. states in order to unleash a “litigation storm against Linux” — including derivatives like Android:

The law would make it possible for Microsoft to block Android sales in whatever state passed such laws if it could find some tie between the Android product and some manufacturer of a contracted part in China or wherever who happened to use a pirated version of Microsoft Word — not to make the part but to write up an ad for it. Ephemeral, much? But can you imagine how much litigation could spring from a law like this? How little it would take to keep litigation in the air forevermore? And you don’t have to even prove infringement in China, just allege it to initiate proceedings.

Of course, Jones is quick to note that the state of Washington’s “protections” do not extend to companies like Red Hat that profit from selling open source support and services.  Under the law, software companies with proprietary licenses like Microsoft

can sue in civil court and the Attorney General can go after the “wrongdoer” US company, if a notice is sent and no amelioration occurs. But if the violation is of an *open source license*, the victim can’t sue anyone under the bill, and the Attorney General does nothing for you. It’s an exception to the law.

Microsoft is a place where sociologists could work

Sociology majors are always wondering what kinds of jobs they might have in the future. I ran across an article that mentioned a talk by “Mark Smith, Research Sociologist at Microsoft.” With a little Google searching, I found an excerpt from a 2003 interview with Smith who describes how he ended up at Microsoft:

How did a guy like you get to work for a company like Microsoft?
I’m a sociologist. I’ve now been at Microsoft Research about four-and-a-half years. Microsoft has a few social and cognitive psychologists, but I’m the only sociologist.

Which means what, exactly, in the context of technology employment?
A sociologist studies the attributes of relationships and the group of relationships that add up to a collective or a community. As a technology group, our mandate is to both explore and to build tools to study the phenomenon that we could call online community. We sociologists don’t like to use the term “community,” particularly–we like to refer to them as social cyberspaces…

So why exactly does Microsoft need a resident sociologist?
Microsoft has a big investment in online communities, and has not had until recently many tools to enhance that investment. What Microsoft wants around communities is what every enterprise does, which is a peer-support, knowledge-management application. And that means that if you go into Usenet, you’ll find 3,000 Microsoft public newsgroups, with 1.5 million people posting 10 million messages. And that’s 2002–and it’s going to more than double this year, because it more than doubled in ’01. We don’t see traffic flagging at all.

Trained sociologists could be very useful to businesses and organizations who want to conduct their own research and see how potential customers or clients operate in the world. I remember reading an article years ago about Microsoft employing anthropologists who would live with (or spend extended periods of time with) families in order to see how the different family members would use the computer and Windows.

What would it take for more sociologists to convince organizations they can help add to their bottom line or help them reach their goals? Or what might it take for businesses or organizations to start seeking out more sociologists?

Found hypocrisy; still searching for clarity

In case you haven’t heard, a few days ago Google started publicly accusing Microsoft’s Bing of stealing its search results.  Juan Carlos Perez over at PCWorld has published an interesting roundup of reactions to Google’s new “strategy” of public accusations:

While the merits of Google’s accusation are up for debate — Microsoft denies the charge — the fact that Google chose to complain in such a loud and agitated manner has become fertile ground for analysis and comment by industry observers.

Opinions range from those who view Google’s actions as hypocritical to others who say the company did the right thing by airing its grievance.

PCWorld’s link to Daniel Eran Dilger reaction over at Roughly Drafted is especially worth checking out.  Personally, I come down on the “Google is being hypocritical” side of things.  It’s hard to have the expansive view of copyright law and fair use that Google embraces for its own activities and then to complain with any legitimacy about Microsoft’s alleged behavior.

Unfortunately, copyright law in general (and fair use in particular) is notoriously unclear, malleable, and subject to judicial whims.  It’s doubtful that Google will actually sue Microsoft over this, so we may never know what the “answer” is.

However, even if a U.S. court upheld Microsoft’s right to copy Google’s search results (assuming that’s what happened here), that would only give us an answer (1) on these specific facts (2) as between parties willing to litigate (and maybe even (3) before that particular judge).  Given the high costs of litigation, most non-Fortune-500 copyright users claiming fair use rights usually find it is in their best interest to settle for a few thousand dollars when saddled with a copyright infringement lawsuit.  Indeed, there are companies based on this very business model that are out there suing people; the number of copyright infringement suits is rising.

This latest spat between Google and Microsoft is, to some extent, a sideshow, but it does highlight some of the problems that uncertainty breeds within copyright law.  I’m not worried about Microsoft’s ability to defend itself:  it’s a multi-billion dollar company with lawyers and PR specialists both in-house and on speed dial.  I am worried about the start ups that are seeking to be the next Google or Microsoft:  they generally can’t afford to get anywhere close to the line because they know that an infringement lawsuit may mean millions in legal fees and damages, so they back off and play it safe.

That’s the real cost of un-clarity in copyright law.