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Spain would benefit from a sunnier view of tech

Sun, sea, sand. And a new entrepreneurial generation hungry for success. Spain and Portugal probably offer the closest Europe has to the Californian lifestyle. The two countries also have lively tech sectors. Lisbon is burnishing its tech credentials this week by hosting the Web Summit, billed as the world’s largest conference of tech chief executives, entrepreneurs and policymakers. It lured the event away from Dublin, once Europe’s favourite tech hotspot, two years ago. Google is creating hundreds of jobs at a new support centre outside the Portuguese capital. Portugal has given birth to a small but growing band of unicorns — tech companies valued at more than $1bn. OutSystems, a provider of “low-code”, or easily tailored, enterprise software, became the latest to reach that status after a fundraising in June. Another is Talkdesk, which sells easy set-up call centre technology and raised $100m in October. In Spain there has also been a surge of investment in tech companies in recent years. Maxi Mobility, owner of Cabify, a car-booking rival to Uber that operates in the Spanish and Portuguese-speaking world, reached unicorn status when it raised $160m earlier this year. Spain and Portugal are both eager to harness new sources of growth and a new spirit of entrepreneurialism after years of austerity and painful economic adjustment. Brexit may provide extra opportunities. Both countries offer relatively cheap labour and a high standard of living at low cost. Both have socialist governments, propped up by radical leftwing parties, that are nonetheless eager to talk the shiny talk of innovation and enterprise. But there the similarity ends. Spanish entrepreneurs complain that their socialist prime minister Pedro Sánchez, for all his start-up nation rhetoric, is heading in the wrong direction. The treatment of Cabify suggests as much. Faced with a well-organised campaign by licensed taxi drivers against car-booking apps, the government gave way. First it said it would issue only one minicab permit for every 30 fully licensed taxi drivers. Then it passed the hot potato to Spain’s 17 regional governments, which are even less likely to stand up to local vested interests. To the government’s more liberal critics, it smacks of classic socialist protection of producer interests. Other gig economy companies such as Glovo, a Barcelona-based delivery service, have been hauled through the courts by employees and labour inspectors for not giving their freelance workers more rights. Now Spain is seeking to become the first EU country to impose a digital tax on tech groups — outpacing the EU, which cannot agree a way forward, or the OECD, which is working on a global standard. Madrid envisages a 3 per cent levy next year on revenues from online advertising, data or platform services by groups with global sales of at least €750m, including €3m in Spain. “It is a fundamental error to think you can attack Facebook, Apple, Google and Amazon and shield all the companies that lie behind them,” said José Luis Zimmerman, the head of Adigital, Spain’s association for digital companies. To be fair, many of these issues predate the current government. Policymakers around the world are grappling with many of the same issues arising from disruptive technologies that are nonetheless highly attractive to consumers. Britain, Italy and France could soon follow with digital taxes of their own, having already had run-ins of their own with car-booking and delivery apps. But, rolled together with raising taxes and lifting the minimum wage, these Spanish actions suggest a government minded to hold back disruptive innovation rather than embrace it. If Madrid wants to prove otherwise, say entrepreneurs such as Sacha Michaud, Glovo’s co-founder, it needs to get on the front foot and draw up new “intermediate” labour market rules for start-up workers, like France, or make it easier to award stock options. Portugal has its own problems: an onerous tax system and skills shortages. But it has been more willing to embrace competition and innovation. It has a tradition of Atlantic openness and a small domestic market highly reliant on services. It also has many workers in low-paid jobs, keen to top up their wages with gig economy work. António Costa, a former mayor of Lisbon, has proved pragmatic and accommodating to business as prime minister, said Miguel Moreira, a former tech company chief executive and now a consultant. “He has created a climate of optimism which was totally the opposite of what we had before,” he said. “That works well in the tech world.” Spain has plenty of sunshine. But a sunnier outlook would help.