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By Andy Sullivan, Gabriel Debenedetti and Poornima Gupta
WASHINGTON, May 22 (Reuters) - For years, Apple Inc kept a low profile in Washington as it grew into one of the most valuable companies in the world. Now the iPad maker has taken the lead, perhaps inadvertently, on a top priority for U.S. business: simplifying America's tax code.
Chief Executive Tim Cook, who was called before the Senate Permanent Subcommittee on Investigations on Tuesday to answer questions about Apple's alleged tax avoidance, used his appearance to plead for an overhaul of corporate taxes. That marked a sharp turnabout for a company that until now has been content to let rivals like Google and Microsoft fight Washington policy battles.
And even though the scrutiny Apple has come under in Washington could further challenge the company as it copes with a sagging stock price, rising competition and questions about its labor practices, it may have little choice but to commit fully to the fight over the corporate tax code.
"They are very, very tactical," said a former Apple lobbyist who asked for anonymity because he was not authorized to speak for the company. "They only join issues they really care about."
Recently, Apple has backed unsuccessful legislation that would have allowed international companies to bring overseas profits back home without paying the 35 percent corporate income tax.
Repatriation of profits has been a top concern for U.S. companies, which collectively have more than $1.5 trillion sitting offshore. Most say they keep the money there to avoid the taxes they would face by bringing it home.
Bowing to increasing shareholder pressure to distribute some of the $100 billion it keeps overseas, Apple has opted to borrow money at low interest rates rather than bring the cash home and take the tax hit.
Apple's Washington office referred questions to its California headquarters. Officials there declined to comment.
Apple has spent far less than other corporate titans on Washington lobbying over the past decade, records show, and the company has often declined to work with other technology companies on issues affecting the industry as a whole. It dropped out of the U.S. Chamber of Commerce in 2009 after it disagreed with the business lobby's stance on climate change.
The company spent about $2 million on lobbying last year, up from $180,000 in 1999, records show. This year it is on pace to nearly double last year's figure.
Apple's lobbying expenditures still pale in comparison with those of Microsoft Corp., which spent $8.1 million in 2012, and Google, which spent $16.5 million, records show.
And unlike other businesses such as AT&T and Exxon Mobil, Apple has not set up a political action fund to distribute employee contributions to congressional allies - a common tool for wielding influence in Washington.
"Clearly, Apple does not have a huge footprint for the tech sector. I don't mean to denigrate almost $2 million (spent on)lobbying - that's a lot of money - but it's not as much as other tech companies have been spending," said Bill Allison, editorial director for the Sunlight Foundation, a non-profit that deals with money in politics.
Lobbyists not associated with the firm privately said Apple's minimal Washington presence could have put it in the crosshairs of the Senate subcommittee, which on Monday accused the company of ducking $9 billion in U.S. taxes through offshore subsidiaries. The lobbyists pointed to the example of Microsoft, which had little presence in Washington before antitrust investigators at the Department of Justice nearly succeeded in splitting the company up in the 1990s.
Though Apple, like many other Silicon Valley companies, served as an important source of campaign money for Democratic candidates in the 2012 election, it has enlisted experienced Republicans to make its case in Washington.
Apple's chief lobbyist, Catherine Novelli, served as a top trade official in Republican President George W. Bush's administration. Other in-house lobbyists have worked as aides to senior Republican lawmakers, including Texas Representative Joe Barton, who used to oversee tech issues as chairman of the House Energy and Commerce Committee, records show.
The company also has hired outside firms to extend its reach in Congress and throughout government. Lobbyists at Fierce, Isakowitz & Blalock and Capitol Tax Partners have worked for the Bush administration and top Republicans like Senate Minority Leader Mitch McConnell.
The Glover Park Group and the Franklin Square Group have provided lobbyists from the Democratic side of the aisle who lobby on tax, broadband, electronic waste and spectrum issues.
The company has also enlisted Jon Bernstein, a former Democratic staffer at the Federal Communications Commission, to lobby that agency and the White House on subsidies for broadband access and technology-related legislation.
None of the lobbyists immediately responded to requests for comment.
The company does have one ace in its pocket: its sleek gadgets. Even lawmakers who grilled Cook on Apple's tax practices said they were avid iPhone and iPad users.
"I love Apple!" Democratic Senator Claire McCaskill declared.
FRANKFURT (Reuters) - German software company SAP is looking to recruit people with autism as programmers and product testers, drawing on skills that can include a close attention to detail and an ability to solve complex problems.
SAP has asked start-up Danish recruitment company Specialisterne to help it find, train and manage employees diagnosed with the disability.
"They bring a special set of skills to the table, which fits with SAP," said a spokesman for the company, which has already hired people with autism in India and Ireland.
Specialisterne Chief Executive Steen Thygesen said the partnership was his first with a multinational company to help with its worldwide recruitment.
The Danish company says it has already helped several hundred autistic people to find a job. Sufferers often find it harder to communicate and some have lifelong learning disabilities.
Those with a form of autism known as Asperger syndrome can sometimes have above-average intelligence. As children, they may prefer mathematics and other subjects rooted in logic and systems, according to Britain's National Autistic Society.
"People with autism have some unique abilities to really focus on their task and stay focused for long periods of time. They are also good at spotting discrepancies in data," said Thygesen, a former manager with Microsoft and Nokia whose 14-year-old son has Asperger syndrome.
According to the U.S. Centers for Disease Control and Prevention, 1 in every 88 children in the United States and almost 1 in 54 boys are diagnosed with autism.
The SAP spokesman said the company aimed to reflect the proportion of people diagnosed as autistic in society within its 65,000-strong workforce - or about 1 percent.
A Berlin-based company, Auticon, already exclusively employs autistic people as software testers. It has a team analyzing data for Vodafone Germany, an Auticon spokesman said.
(Reporting by Harro ten Wolde; Editing by Tom Pfeiffer)
WASHINGTON (Reuters) - Using an unusual global tax structure, Apple Inc has held billions of dollars in profits in Irish subsidiaries to pay little or no taxes to any government, a Senate report on the company's offshore tax structure concluded on Monday.
In a 40-page memorandum released a day before Apple CEO Tim Cook is scheduled to testify before Congress, the Senate's Permanent Subcommittee on Investigations identified three subsidiaries that have no "tax residency" in Ireland, where they are incorporated, or in the United States, where company executives manage those companies.
The main subsidiary, a holding company that includes Apple's retail stores throughout Europe, has not paid any corporate income tax in the last five years.
The subsidiary, which has a Cork, Ireland, mailing address, received $29.9 billion in dividends from lower-tiered offshore Apple affiliates from 2009 to 2012, comprising 30 percent of Apple's total worldwide net profits, the report said.
"Apple has exploited a difference between Irish and U.S. tax residency rules," the report said.
Ahead of Tuesday's hearing, Apple said on Monday it does not use "tax gimmicks" and that the company will pay more than $7 billion in U.S. taxes in fiscal 2013.
Apple defended the main subsidiary highlighted by the subcommittee's report, saying it does not reduce Apple's U.S. tax liability, the company said in a comment posted online as part of Tuesday's prepared remarks.
Subcommittee staffers said on Monday that Apple was not breaking any laws and had cooperated fully with the investigation.
CODE OVERHAUL SOUGHT
Tuesday's hearing is the second to be held by Senator Carl Levin, a Michigan Democrat and chairman of the subcommittee, to shed light on the weaknesses of the U.S. corporate tax code. Levin has sought to overhaul the code in Congress.
In September, the subcommittee scrutinized the offshore tax structures of Microsoft Corp and Hewlett-Packard . Committee staffers said they did not find similar subsidiaries set up for stateless tax bills at those two companies.
Apple also uses two conventional offshore tax practices typical of multinational companies' tax-avoidance strategies, the report said.
Multinational corporations value goods and services moving across international borders from one corporate unit to another. Known as "transfer pricing," these moves are frequently managed to reduce corporations' global tax costs.
Corporations must pay the top U.S. 35-percent corporate tax on foreign profits, but not until those profits are brought into the United States from abroad. This exception is known as corporate offshore income deferral.
Apple's tax structure highlights flaws in the U.S. corporate tax code so that Congress "can effectively close the loopholes used by many U.S. multinational companies," Arizona Senator John McCain, the subcommittee's top Republican, said in a statement on Monday.
Levin, who announced he will retire at the end of 2014, introduced legislation in February to close tax loopholes. So far, the bill does not have any Republican co-sponsors. Similar legislation has been introduced in the House of Representatives.
Government tax officials from the Internal Revenue Service and Treasury Department also are scheduled to testify before the subcommittee on Tuesday.
(Reporting by Patrick Temple-West; Editing by Howard Goller, Bernard Orr)
* Google expects Glass etiquette to evolve
* Casino has banned devices while gambling
* "Those things freak me out"
By Alexei Oreskovic
SAN FRANCISCO, May 20 (Reuters) - Google staged four discussions expounding on the finer points of its "Glass" wearable computer during last week's developer conference. Missing from the agenda, however, was a session on etiquette when using the recording-capable gadget, which some attendees faithfully wore everywhere - including to the crowded bathrooms.
Google Glass, a cross between a mobile computer and eyeglasses that can both record video and surf the Internet, is now available to a select few but is already among the year's most buzz-worthy new gadgets. The device has geeks all aflutter but is unnerving everyone from lawmakers to casino operators worried about the potential for hitherto unimagined privacy and policy violations.
"I had a friend and we're sitting at dinner and about 30 minutes into it she said, 'You know those things freak me out,'" said Allen Firstenberg, a technology consultant at the Google developers conference. He has been wearing Glass for about a week but offered to take them off for the comfort of his dinner companion.
On another occasion, Firstenberg admitted to walking into a bathroom wearing his Glass without realizing it.
"Most of the day I totally forget it's there," he said.
Many believe wearable computers represent the next big shift in technology, just as smartphones evolved from personal computers. Apple and Samsung are said to be working on other forms of wearable technology.
The test version of Glass looks like a clear pair of eyeglasses with a hefty slab along the right side. Since it began shipping to a couple thousand carefully selected early adopters who paid about $1,500 for the device, it has inspired a bit of ridicule - from a parody on "Saturday Night Live" to a popular blog poking fun at its users.
Other industry experts take a more serious tack, pointing out the potential for misuse because Glass can record video far less conspicuously than a handheld device.
Glass also has won many fans. Google and some early users maintain that privacy fears are overblown. As with traditional video cameras, a tiny light blinks on to let people know when it is recording.
Several Glass wearers at the developers conference said they whip the device off in inappropriate situations, such as in gym locker rooms or work meetings. Michael Evans, a Web developer from Washington, D.C., attending the Google conference, said he removed his Glass when he went to the movies, even though the device would be ill-suited for recording a feature-length film.
"I just figured I don't want to be the first guy kicked out of the movies," he said.
NO GLASS ALLOWED
A stamp-sized electronic screen mounted on the left side of a pair of eyeglass frames, Glass can record video, access email, provide turn-by-turn driving directions and retrieve info from the Web by connecting wirelessly to a user's cell phone.
Google Executive Chairman Eric Schmidt dismissed concerns about the brave new world of wearable computers during a talk at Harvard University's Kennedy School of Government in April.
"Criticisms are inevitably from people who are afraid of change or who have not figured out that there will be an adaptation of society to it," he said.
Schmidt acknowledged that there are certain places where Glass will not be appropriate but that he believed new rules of social etiquette will coalesce over time. Firstenberg said it will take time for all sides to get comfortable with the new technology.
"I don't think we should go into the conversation assuming that Glass is bad," he said.
Indeed, previous technology innovations such as mobile phones and wireless headsets that initially raised concerns are now subject to tacit rules of etiquette, such as not talking loudly on the bus and turning a ringer off in a meeting.
Still, some have decided to leave nothing to chance.
Casino operator Caesar's Entertainment recently announced that Glass is not permitted while gambling or when in showrooms, though guests can wear it in other areas. In March, Seattle's Five Point Cafe made headlines for becoming the first bar to ban Glass. "Respect our customers privacy as we'd expect them to respect yours," says a statement on the café's website.
The California Highway Patrol says there is no law that explicitly forbids a driver from wearing Glass while driving in the state. But according to Officer Elon Steers, if a driver appears to be distracted as a result of the device, an officer can take enforcement action.
PRIVACY TRACK RECORD
Lawmakers are beginning to consider Glass.
On Thursday, eight members of the U.S. Congress sent a letter to Google Chief Executive Larry Page, asking for details about how Glass handles various privacy issues, including whether it is capable of facial recognition.
According to Google, there are no facial recognition technologies built into the device and it has no plans to do so "unless we have strong privacy protections in place."
During one of last week's conference sessions - an open discussion about Glass - members of the Glass team answered a question about privacy by noting that social implications and etiquette have been a big area of focus during the development of the product, which is still a test version.
Some of the Glass-phobia may stem from Google's own track record on privacy. In 2010, Google revealed that its fleet of Street View cars, which criss-cross the globe taking panoramic photos for the Google Maps product, also had captured personal information such as emails and web pages that were transmitted over unencrypted home wireless networks.
"The fact that it's Google offering the service, as opposed to say Brookstone, raises privacy issues," said Marc Rotenberg, the executive director of the Electronic Privacy Information Center, a non-profit privacy advocacy group, citing Google's history and its scale in Internet advertising.
Rotenberg says his main concern centers on the stream of data collected by the devices - everything from audio and video to a user's location data - going to Google's data centers.
Ryan Calo, a University of Washington law professor who specializes in privacy and technology, said Glass is not very different from other technologies available today, whether it is a smartphone or "spy" pens that secretly record audio. But Glass is on people's faces, so it feels different.
"The face is a really intimate place and to have a piece of technology on it is unsettling," Calo said. "Much as a drone is unsettling because we have some ideas of war."
For all the hand-wringing, some early adopters are sold.
Ryan Warner, who recently graduated from college and who has developed a recipe app for Glass with Evans, said he was surprised by the reaction he got when he went to a bar.
"I was like, 'I don't know if I should have it on or not.' I was kind of in that phase," he said, "and the bouncer was like, 'Oh, my god, is that Google Glass?' He was excited."
By Jane Lee
SHANGHAI, May 20 (Reuters) - Humor may not always translate well, but Jon Stewart is picking up millions of fans in China, where his gloves-off political satire is refreshing for many in a country where such criticism is a rarity - especially when directed at their own leaders.
A recent segment on North Korea scored over 4 million views on microblogger Sina Weibo, and even stodgy state broadcaster CCTV has used Stewart's "The Daily Show" in a report, though they wouldn't let a Chinese version of him near their cameras.
Recent popular sequences have included one in which Stewart lampooned the Chinese hackers who hacked into the New York Times computer system earlier this year, wondering if that was the best they could do.
But far from squelching Stewart, CCTV even used one of his sequences on Guantanamo Bay to criticise Obama in a regular broadcast - a move widely derided by netizens.
In China, however, such criticism tends not to be welcomed by the government. Dissident artist Ai Weiwei, who regularly criticises the government for what he sees as its flouting of the rule of law and human rights, was detained for 81 days in 2011, sparking an international outcry.
"There's nothing like political satire here," said David Moses, who studies and writes about Chinese humour.
Though the exact timing of Stewart's entrance to China is unclear, many have been watching him for four or five years, mainly through the Internet and Weibo.
"Being a journalist, you have to find out the truth," said Mao Moyu, a Shanghai journalism student who got hooked on Stewart four years ago.
"If there's ... something that hurts the public interest you have to stand out, no matter how sharp the thing is. You have to stand out and say that's not right."
Part of Stewart's popularity is that he seems cool to young people in love with all things foreign, but a thirst for satire that is not afraid to show its face contributes too, Moses said.
The closest thing that exists in China is coded references and puns that tweak official pronouncements or sound like obscenities.
"That's just shooting a finger at the government. But this is full-fledged jokes and routines about North Korea or about China and trade...It's just what they wish they could do here," Moses said.
Free translations into Chinese by Stewart's fans have boosted his popularity. In fact, one - known as Gu Da Bai Hua - now even has his own fan base.
China's thirst for foreign satire is so great that Stewart is not the only popular U.S. comic. Some Chinese say they prefer rival television satirist Stephen Colbert - although humour may not be the only issue at stake.
"I think I like Stephen Colbert's pronunciation more because it's much clearer for me," said Shanghai student Peng Cheng.
For a video link, click here: http://link.reuters.com/gux28t (Editing by Elaine Lies and Michael Perry)
ST. LOUIS, May 17 (Thomson Reuters Accelus) - U.S. authorities have seized two accounts linked to a major operator in the booming Bitcoin digital currency market, Tokyo-based exchange Mt. Gox. The move may prevent the firm from facilitating the purchase and sale of Bitcoins in U.S. dollars at a time when use of the currency and its value has mushroomed.
Bitcoin, which unlike conventional money is bought and sold on a peer-to-peer network independent of any central authority, has grown popular among users who lack faith in the established banking system.
The price of the volatile currency ballooned in March as a result of the Cyprus bank crisis. Authorities worry that a lack of regulation has left the currency vulnerable to money launderers and other criminals.
A seizure warrant obtained Tuesday by the Department of Homeland Security froze an account that an Iowa-based online payment processor, Dwolla Inc, held at Veridian Credit Union in the name of Mutum Sigillum LLC.
An affidavit filed by an agent with the department's investigations unit states that Mutum Sigillum, a Mt. Gox subsidiary incorporated in Delaware, was operating as an unlicensed money transmitter, in violation of federal law.
Treasury's anti-money laundering unit, the Financial Crimes Enforcement Network (FinCEN), in March issued guidance that dubbed digital currency exchanges money transmitters, a finding that obliged such businesses to register with FinCEN and obtain any mandated state licenses.
A search of FinCEN's online registration database Friday morning suggested that neither Mt. Gox nor Mutum Sigillum had registered. The affidavit cited Mutum Sigillum's failure to register with FinCEN as sufficient grounds to seize its accounts.
Both Mutum Sigillum and Mt. Gox, which says it handles 80 percent of Bitcoin trading, are owned by Mark Karpeles, the affidavit states. It adds that Karpeles opened an account in Mutum Sigillum's name at Wells Fargo in May 2011, and that when doing so completed a form in which he said it was not a money transmitter.
Karpeles did not immediately respond to a request for comment. Nor did Dwolla.
The Wells Fargo account was seized earlier this month as part of the same investigation that prompted the seizure of Mutum Sigillum's Dwolla account at Veridian Credit Union, the affidavit states.
It also notes that those wishing to use U.S. dollars to buy Bitcoins deposited money with Dwolla and directed that it be forwarded to Mt. Gox. When people wanted to cash out, Mt. Gox wired funds from an account at Sumitomo Mitsui Bank in Japan to the Wells Fargo account and U.S. dollars were sent to Dwolla.
An Homeland Security department informant based in Maryland engaged in such transactions, the affidavit states, presenting the informant's Bitcoin exchanges as evidence of Mutum Sigillum's purported status as a money transfer firm.
The seizure of the Mt. Gox-linked accounts may threaten the exchange's ability to do business in U.S. dollars. The impact on the overall Bitcoin market is unclear.
Some Mt. Gox customers have already taken to message boards to express concern about their ability to buy Bitcoins with U.S. dollars or liquidate existing investments. One user posting on a Bitcoin question and answer site suggested this problem was a grave one for the currency and Mt. Gox.
"Most of the trading volume is in dollars at Gox if I'm not mistaken, so this might be the death blow for them," the user's post stated.
Thomson Reuters' Compliance Complete reported last month that Karpeles said all of Mt. Gox's U.S.-dollar activity was accomplished via a Dwolla account.
When Compliance Complete asked at the time whether Mt. Gox had registered with FinCEN in the wake of the March guidance, Karpeles said that it had not, but that it planned to do so. He added that Mt. Gox and Dwolla were "discussing compliance issues on a regular basis."
A spokeswoman for Homeland Security declined to comment on whether the agency, or any foreign law enforcement agency with which it may be cooperating, plan to seize any other accounts linked to Karpeles, Mt. Gox, or other Bitcoin exchanges.
(This article was produced by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete (http://bit.ly/16Ebxub) provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges. Follow Accelus compliance news on Twitter: @GRC_Accelus)
(Editing by Randall Mikkelsen and Phil Berlowitz)
TAIPEI (Reuters) - Foxconn Technology Group said on Friday it needs more time to reduce overtime at its China factories after labor monitors appointed by top client Apple Inc said cutting workers' hours by a July 1 target would be a challenge.
Apple last year commissioned the Fair Labor Association (FLA) to investigate working conditions at the plants after Foxconn, the holding company for Hon Hai Precision Industry Co Ltd, came under fire for a series of suicides and accidents since 2010.
In its third report, the FLA said Foxconn had resolved 98 percent of the issued raised in the initial investigation, including cutting working hours and overtime, improving health and safety and increasing union participation. The company employs more than one million people at its China plants.
Foxconn, however, faced the challenge of further cutting overtime hours to the standards set by Chinese law by the target date, said the report which was released on Thursday. The law stipulates a maximum of 40 working hours plus nine overtime hours a week.
"We need more time with the deadline," Foxconn spokesman Louis Woo told Reuters. "We can't say when we can meet that target now. We're trying to come up with a realistic timetable."
Many Foxconn workers, migrants from other parts of China, oppose a reduction in overtime because they want to make as much money as possible in a short time. Some workers have said they may leave the company if overtime is cut.
Hon Hai, the world's largest electronics contract manufacturer, draws an estimated 60 to 70 percent of its revenue from assembling gadgets and other work for Apple.
(Reporting by Clare Jim; Editing by Jonathan Standing and Miral Fahmy)
LONDON (Reuters) - The website of British newspaper the Financial Times was hacked on Friday, apparently by the "Syrian Electronic Army", a group of hackers and on-line activists who say they support Syrian President Bashar al-Assad.
Stories on the FT's website have had their headlines replaced by "Hacked By Syrian Electronic Army" and messages on its Twitter feed read: "Do you want to know the reality of the Syrian 'Rebels?'" followed by a link to a video.
The group has previously targeted the Twitter account belonging to the BBC's weather service, and the accounts of rights group Human Rights Watch and of French news service France 24.
FT publisher Pearson and Twitter were not immediately available for comment.
(Reporting by Mohammed Abbas, Kate Holton and Ben Berkowitz)
(Reuters) - Apple Inc CEO Tim Cook will propose tax changes that would encourage firms to bring home more of their offshore funds when he faces congressional queries next Tuesday over his company's overseas cash holdings and tax bills, the Washington Post reported.
Cook's proposals would aim to put more companies' offshore money to use creating jobs and conducting research and development in the United States, he said in an interview with the Post.
Cook also told the Post that the 35 percent tax on cash brought back to the United States is a "very high number."
"We are not proposing that it be zero. I know many of our peers believe that. But I don't view that. But I think it has to be reasonable," he said.
Apple in a statement to Reuters acknowledged that Cook would be appearing before the congressional subcommittee but gave no information on the reported proposals.
Apple paid $6 billion in federal corporate income tax in fiscal 2012, the company said.
Next Tuesday's hearing is centered on possible changes to the tax code to ensure that more cash-rich companies bring their money back the United States.
Apple's Cook joins the heads of technology titans Hewlett-Packard Co and Microsoft Corp who have also been questioned in U.S. Senate subcommittee hearings on companies keeping cash overseas to lower their tax payments.
(Reporting by Jennifer Saba in New York; Editing by Edmund Klamann)
By Alexei Oreskovic
SAN FRANCISCO (Reuters) - Social networking services Facebook Inc and Twitter are coming to Google Glass, the wearable computer made by the Internet search company.
Google Inc announced on Thursday a half-dozen apps specially designed to work on its Glass devices. News network CNN, fashion magazine Elle, as well as online apps Tumblr and Evernote were among the half-dozen new apps for Glass unveiled during Google's annual developer conference in San Francisco.
Google Glass is a stamp-sized electronic screen mounted on the left side of a pair of eyeglass frames which can record video, access email and messages and retrieve information from the Web.
Google began distributing the devices last month to a limited number of developers, but it has yet to specify when a version will be available for consumers or at what price.
The futuristic-looking devices have been a common sight at the Google conference this week, with many of the attendees and staffers wearing Glass. But Google executives gave Glass short shrift during the more than three-hour keynote talks on Wednesday, barely mentioning Glass among the litany of new products and services discussed on stage.
(Reporting By Alexei Oreskovic; Editing by Kenneth Barry)