The fast-evolving world of hotel automation aims to lower labor costs and streamline services for guests by replacing humans with automatic liquor dispensers, noise sensors, offshore concierges on video monitors and more.
Welcome to the world of hotel automation, where wall monitors and chatbots have replaced in-person interactions with human staff.
Guests staying at a Sextant hotel in New Orleans check in without any interaction with a human being. They’re greeted by a virtual concierge visible on a computer monitor but based thousands of miles away. And if they want to wind down from a stressful flight, a shot of Maker’s Mark bourbon from the lobby’s automated booze dispenser will cost them $5 — but if someone isn’t there in-person that day to check their IDs and present them with a special card for the machine, they’re out of luck.
Welcome to the fast-evolving world of hotel automation, where wall monitors and chatbots have replaced in-person interactions with human staff, and third-party tech and services partnerships are a core part of the business model.
For hospitality startups like Sextant Stays, which owns and operates apartment buildings and homes in Fort Lauderdale, Miami and New Orleans that are available for short- and long-term stays, the desire for contactless interactions during the COVID-19 pandemic accelerated a mission to make larger spaces and premium amenities accessible to guests at lower prices by integrating automated tech and reducing labor costs. Yet, while automation adds novelty and convenience, it opens the door to new technical glitches and introduces unique labor dynamics that go beyond the usual tensions when robots replace humans.
“We don’t want to take away all human interaction. We’re just trying to rethink traditional hotel cost structure,” said Sextant Stays CEO Andreas King-Geovanis.
Some large hotel chains introduced contactless features during the pandemic such as online check-out and digital room keys, and many use automated systems to enable personalized, digital communications with guests. A minimal number of hotels today have experimented with actual robots to enable check-in and concierge services or to deliver drinks or food to guests. However, hospitality startups like Sextant, Sonder and others are paving the way toward what the broader hospitality industry could look like someday.
“They are a sign of things to come,” said John D. Burns, president of Hospitality Technology Consulting, regarding Sextant Stays.
Note: Sextant Stays did not pay for or subsidize my stay at The Lola. I chose to stay there while in New Orleans in June to observe a computer vision conference, not realizing when booking the room that my stay would involve automated self-check-in and an array of interactions with emerging tech.
Guests staying at The Lola, Sextant’s historical building near the Ernest N. Morial Convention Center in New Orleans, may be surprised to see in the lobby what at first glance appears to be the disembodied head of a woman giving them a smile. A closeup of her face appears on a small tablet-sized monitor. Depending on the robotic hardware used in a given location, the monitor may be positioned on a pole attached to wheels or, in a newer iteration, on a wall.
A virtual concierge (right) greets guests in the lobby at The Lola hotel in New Orleans.Photo: Kate Kaye/Protocol
This is how Sextant presents one of its 10 full-time virtual concierges, all of them based more than 8,000 miles away in the Philippines. She may greet guests at New Orleans properties one day and Miami the next.
Sonder, another hospitality company, operates hotels and apartment-style properties in 40 markets around the world using automated self-check-in and digital tools for requesting room cleaning or other services, but the company does not use virtual concierges the way Sextant does.
“Some of our larger markets and properties, specifically our hotels, may have staffed front desks, and our local teams live and work in the market and are either present or regularly moving across our properties in a given city,” said Deeksha Hebbar, chief operating officer at Sonder.
Sextant’s approach to virtual concierge employing overseas workers is “really quite rare,” said Burns.
For Sextant, it’s all about cost savings, allowing the company to pay a lean concierge staff of 10 people instead of the 30 they’d need on staff in a traditional in-person setup. “That traditional front desk agent — 80% of the time they’re not really interacting with people outside of that 11 a.m. to 4 p.m. rush. Our concept was, let’s make sure that we’re as productive as possible to rethink the traditional hotel cost structure,” King-Geovanis told Protocol.
The company has 90 full-time staff in the Philippines, some of whom do entry-level accounting or marketing-related work if they’re not concierges. They are paid a starting wage of $6 an hour — higher than the 570 pesos, or $10.25, people in Manila make for a full day’s work.
“In 2020 we really started to say, ‘Hey, if people can take phone calls and respond to messages in the Philippines, why couldn’t they do entry-level accounting or marketing?’” King-Geovanis said.
The impacts of offshoring labor or replacing humans with automation and robotic tech have been studied for years, but use of virtual workers to replace people in the travel and hospitality industry could have unique implications on tourism-driven economies where jobs are inherently linked to in-person work. And for a culturally rich destination like New Orleans, offshoring labor could change the way people experience a place, removing interactions with the very humans who are steeped in that culture.
“One reason why people travel is to experience the local culture, and this type of system is basically eliminating that experience of the local culture. Eventually over time people will stop expecting that as part of the experience,” said Lisa Kresge, a lead researcher at the UC Berkeley Labor Center who focuses on digital and algorithmic technologies.
“Technology is an enabler but cannot yet completely replace the necessity of human interaction at some level in the hospitality experience,” said Hebbar. “We believe that human service will continue to be a critical part of travel and exploration; technology can serve as a first port of call for simple and quick service, with human service (either remote or in-person) still being important to serve more complex guest needs.”
The rooms inside The Lola are decked out with emerging tech, but they’re decorated with a nod to yesterday’s now-fetishized analog machines. Photos on the walls in one room featured closeups of a vinyl record spinning on a turntable and a vintage car. A small beverage fridge in a bedroom resembled a 1950s-era model.
An Orbitz listing for the property notes in special check-in instructions that “A front desk is not available at this property” and “Guests will receive smart lock details,” but it’s not always clear to guests of automated properties that the human staff they expect to be present at a hotel won’t be there. The Sextant Stays website itself does not mention this about The Lola.
“You have to advise people in advance and set their expectations,” Burns said.
Before they encounter the virtual concierge, Sextant guests are asked to validate their identity by uploading a selfie and a photo of their driver’s license, passport or national ID card using software from Sextant partner Superhog. But despite the company’s extreme automation goals, Sextant doesn’t use facial recognition to match the selfie to the guest when checking in, according to King-Geovanis. Instead, he said the selfie and ID data is used by Superhog to verify a guest’s identity to avoid credit card fraud. According to Superhog’s terms and conditions, the company relies on its own partners to check criminal and sex offender databases as a security precaution.
Another security measure: Sextant’s self-check-in system generates a unique code for guests to use to enter its properties. But with additional tech comes additional glitches.
When I stayed at The Lola in June, the automatic locking system was not working, and the building’s front door was left ajar multiple times, creating a security vulnerability. Sextant has security personnel who roam properties in each market, King-Geovanis said.
But all in all, it’s rare to find a Sextant worker physically present in its buildings.
Guests can buy forgotten aspirin or shaving supplies in CVS-branded kiosks or can access a supply closet where extra toilet paper or coffee is stored. Sextant shares revenue from sales of products in the CVS machine, but it pays a fixed rental fee to have it. “It seems to net out about even for us,” King-Geovanis said.
Other devices replace what may have required a call to front desk personnel in the past.
Digital touchscreens provided by GuestView Guide made by Sharp NEC Display Solutions that are affixed to walls in Sextant guest rooms use customers’ booking data to enable personalized welcome messages and let guests click to order $100 mid-stay cleaning services. Noise sensors made by NoiseAware monitor for the sort of loud partying or sounds that can make for a bad night for other guests. The system monitors for sustained, loud noises, but does not record people’s voices, according to the company’s website.
For now, depending on the size of a building or day of the week, between two and eight human beings may be present at any given time to clean the rooms, maintain equipment or check IDs for the alcohol-dispensing machines. The company also has valets and someone at the front desk in its larger buildings with 50 or more units.
As automated systems remove some humans from the process of operating a hotel, they are changing what remaining workers are required to do and how they’re managed. For instance, a housekeeping supervisor at The Lola assisted in communicating with the virtual concierge when my room door code was not operable during an early check-in, a task someone in a customer-facing role would usually handle.
“One of the challenges of these efforts to save labor through these technological [systems] is they often ironically create more labor to deal with them than they would otherwise,” Kresge said.
Training employees to take on multiple roles is part of Sextant’s strategy. “We cross-train employees to be multifunctional,” King-Geovanis said. For instance, in its larger properties, valets — referred to as guest service agents — are also trained to perform front desk duties.
Automation is also altering how hotel housekeepers and maintenance workers are managed. Even some larger hotel chains route and schedule room cleaning through automated software. Listings for Sonder and Sextant Stays housekeeping jobs require cleaning workers to be comfortable with use of mobile apps for collaboration and communications, for example.
“They are essentially being managed by a technological system,” Kresge said regarding some hotel housekeepers who now get their cleaning orders from an app. “If the workforce is not unionized, the ability to have recourse or voice concerns about how the system delegated those tasks is practically nonexistent,” she said.
Automation and virtual work are also altering how workers perceive one another. When an air conditioning unit in a room at The Lola was on the fritz, a maintenance tech who was summoned from another Sextant building to assess the equipment referred to the human-yet-virtual concierge as “the robot.”
“One of the challenges of these efforts to save labor through these technological [systems] is they often ironically create more labor to deal with them then they would otherwise.”
“For those workers, they’re not the ones having the conversations with the concierge, so it is in effect a technology in their reality,” Kresge said.
The company itself has referred to its virtual concierge role using the term, noting, “As a Virtual Concierge, you’d assist our guests through Telepresence Robot.”
While we often talk of anthropomorphizing robots by attributing human characteristics to them, the use of “robot” to describe a human concierge reverses the concept. But King-Geovanis stressed the humanity of his company’s virtual concierges. “These are very real people,” he said, noting that Sextant’s leadership team met with all of its Philippines-based employees in Manila in May.
“If you’re a maintenance worker, for instance, they haven’t had that opportunity [to meet the virtual staff],” King-Geovanis said. “I think ‘robot’ almost makes the service seem a lot colder and dehumanizes. They are real people with real emotions. Our guests actually do interact with them.”
The hospitality industry may need a lot more time before it contemplates such ethical and philosophical questions surrounding automated tech, said Burns. “We do not have the luxury of thinking about these things yet, but the sociology of it is going to become a discussion at some point regarding how robotic versus real-life staff are regarded.”
Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of “Campaign ’08: A Turning Point for Digital Media,” a book about how the 2008 presidential campaigns used digital media and data.
“The really uncharted territory is what CDR means for environmental and social justice.”
Big Tech is shoveling money into carbon dioxide removal as the need for oversight grows.
Michelle Ma (@himichellema) is a reporter at Protocol covering climate. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
Interest in carbon dioxide removal has exploded over the past few years. Money from Big Tech and venture capitalists is funding a growing array of startups, with over $1.4 billion poured into the climate tech space this past quarter. But there are potential ethical issues that should be addressed before the industry gold rush goes too far.
“The really uncharted territory is what CDR means for environmental and social justice, and that’s where I see a lack of understanding,” said Lauren Gifford, a postdoctoral research associate at the University of Arizona, who has studied carbon governance for over a decade. She and other scientists worry that nascent technologies like direct air capture are being deployed without sufficient oversight or forethought about potential unintended negative consequences.
The issues CDR will need to confront are manifold. From noise pollution tied to direct air capture facilities to the ecological impacts of land- and ocean-based carbon removal techniques, the industry has a lot to reckon with as CDR becomes more widely tested and deployed at scale.
Both the scientific community and industry are working to create an ethical framework around carbon removal. Though, to be clear, nothing that’s been put out there so far has had any real enforceability.
In May, researchers published a piece in Frontiers in Marine Science that called for a scientific code of conduct for ocean-based carbon removal, a field that has already come under scrutiny for potentially going too far too fast, without enough consideration of the ecological risks of what startups are attempting. That includes a rogue 2012 experiment to seed the ocean with iron, encouraging a plankton bloom that would suck up carbon dioxide. The proposed code of conduct includes provisions for public or stakeholder engagement, minimization of potential harms and rules about funding.
The CDR community itself is also starting to do some self-examining. The Carbon Business Council, a nonprofit coalition of about 40 carbon management startups, has created an “Oath to Restore the Earth.” Members must sign the document, which includes a promise that, among other things, they will be “cognizant of the implications that my work can have for the biosphere as a whole.”
Ben Rubin, the council’s executive director, said the group was inspired by similar oaths undertaken by those in the medical and legal professions. “By laying out these tenants for responsible growth, I think we really have an opportunity as we scale gigaton removal to do it right and ensure that communities will benefit from where the projects are being located,” he said.
One carbon removal startup, Planetary, is taking it a step further and drafting up its own code of conduct. The company, which developed a process that purifies and stores mine waste in the ocean, plans on depositing its substance in approved ocean outfalls like wastewater treatment plants and power plants.
Pete Chargin, Planetary’s head of strategy and safety, said the startup’s leadership team has always been focused on safety and scientific rigor. At the same time, “On the other side of the ledger, kind of pushing us to go faster, is the fact that the ocean may be going towards a tipping point where it’s impossible to recover,” he said.
When Planetary first started thinking about adopting a code of conduct, Chargin assumed one already existed but was surprised to discover there wasn’t really anything out there they could beg, borrow or steal. “And candidly, the things that were being published were, in my view, not action-oriented,” he said.
He started working with “a few ocean-based NGOs and companies to start bouncing our ideas off them,” and said Planetary hopes to publish a first draft for public comment by the end of the quarter.
Codes of conduct like the Carbon Business Council’s ethical oath and Planetary’s efforts “could go both ways,” according to Gifford. In her view, they’re only as good as how they’re applied. Otherwise they may end up doing more for corporate greenwashing than for ensuring that for-profit carbon removal entities do no harm in the pursuit of drawdown.
Like corporate net-zero pledges, these codes of conduct don’t have teeth; there’s nothing holding pledge makers and oath takers accountable to their promises. In a worst-case scenario, the unfettered growth of the carbon removal industry could cause irreversible harm to local people and ecosystems in service of major polluters eager to pay for removal services.
Still, putting out a public pledge can nudge companies toward responsible behavior. “There’s a lot of social pressure that comes to bear,” as well as reputational risk, Simon Nicholson, associate professor of international relations at American University, whose work focuses on global environmental governance, said.
Public pledges can also be strengthened by customer pressure. “You can have lots of good intentions, but you can also have just really shoddy products,” Nicholson said. That’s why he thinks it’s critical that big corporate buyers of carbon removal credits, companies like Microsoft and Stripe, hire teams of researchers to assess the claims of carbon removal startups. (Although it’s worth noting that even discriminating customers like Stripe have invested in carbon removal projects that have later come under scrutiny.)
“You can have lots of good intentions, but you can also have just really shoddy products.”
Climate researchers point to lessons learned from the carbon offset market as a warning sign of what could happen with carbon removal if proper care isn’t taken to put guardrails around a market free-for-all. Forest carbon offset schemes in places like Indonesia, Peru and the Central African Republic have displaced local communities from land “that they have used for generations for subsistence, livelihoods and cultural reasons,” Gifford said. These communities also already tend to be the most affected by, while contributing the least to, climate change. There’s even convincing evidence that some of these forest preservation offset projects are doing more harm than good.
Though young, the carbon removal field is already starting to see shadows of the same problems. Land-based forest restoration often takes place on agriculturally rich and high-demand land in the Global South. One study found that land-intensive CDR could lead to a five-fold increase in the price of food, which would be hugely devastating to local communities.
In any carbon removal project, it’s critical that frontline communities are consulted and included. That means both people living adjacent to project sites as well as the workers doing the removal, said Andrew Bergman, a Ph.D. student in applied physics at Harvard studying CDR and collective governance of infrastructure. Groups like local fishing communities could be significantly impacted by ocean-based CDR projects, for example, and deserve a say in how they’re implemented, if at all.
“You can’t have carbon removal projects override people’s well-being.”
He recommended that companies write an allowance for community and worker seats on their boards into their codes of conduct. These communities are then able to ask questions about where carbon is being stored and what effect it may have on ecosystems or the built environment.
In Bergman’s view, “like so many technocratic interventions,” carbon removal has become an end in and of itself, as opposed to a means to an end. “You can’t have carbon removal projects override people’s well-being,” he said.
Beyond community impact, the other risk with carbon removal is that its existence allows corporations, including fossil fuel companies that back these projects, to continue polluting the atmosphere.
That means the most critical part of a good carbon removal framework is acknowledging that the work must be accompanied by a good-faith effort to reduce emissions so there’s less carbon to pull from the atmosphere in the first place.
Michelle Ma (@himichellema) is a reporter at Protocol covering climate. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
As management teams at financial institutions look for best practices to make part of their regular toolkit, they are reaching most for the ones that increase the speed and reduce the risk of large-scale change.
That forward-thinking approach can lead financial institutions to leverage AI technology, which can help give decision-makers trusted tools to solve integral challenges vital to the health of the business. One of the leading providers of AI and machine-learning software, DataRobot continues to attract clients in financial services who want to de-risk their AI investments and rapidly scale AI to almost every part of their operations, resulting in improved productivity and higher customer satisfaction.
Based in Boston and operating since 2012, DataRobot allows its clients to systematically create, deploy, manage, and govern AI at global scale. Work that used to take weeks now transpires within hours, allowing employees to focus on their immediate tasks while letting DataRobot manage areas such as compliance automation, fraud detection, and dynamic pricing of assets.
Financial institutions are increasingly seeing AI technology as a competitive advantage, said Jay Schuren, chief customer officer at DataRobot. “AI empowers the financial services industry because it not only helps them save money and mitigate fraud but also improves job satisfaction and the rigor of documentation.”
A McKinsey report argues that linking AI and banking is a savvy strategic decision that benefits the bottom line: “The potential for value creation is one of the largest across industries, as AI can potentially unlock $1 trillion of incremental value for banks, annually.”
The interest in ushering AI into business sectors isn’t abating any time soon either. Global spending on AI is forecast to double over the next four years, growing from $50 billion in 2020 to more than $110 billion in 2024, as an OECD report found.
What AI does best is parse through Big Data to speed up laborious processes and uncover patterns that the human eye can’t track easily. That same report cited above goes on to say how, for the investment community, “information has always been key and data has been the cornerstone of many investment strategies, from fundamental analysis to systematic trading and quantitative strategies alike.”
In 2021, worldwide banking and securities industry IT spend was more than $200 billion, Schuren said. “DataRobot believes every penny of that should deliver value. DataRobot does this by providing decision-makers across the financial services industry with trusted AI solutions to solve mission-critical problems.”
DataRobot can handle a variety of tasks, Schuren said, such as setting prices in advance for assets, whether those are bonds or currency exchanges. The unique aspect of the DataRobot AI Cloud platform is the granularity of answers you can get, and the speed at which you can get those answers. “For example, how do you determine customer churn? Instead of answering that question for a subset of clients within a set timeframe, you can take a look at every single customer and see what their propensity to churn is in a month or two or three months. You can ask the question by geography, time frame, or any other characteristics. DataRobot will automatically try various models across all of those different characteristics at scale, and then we can find the ones that work and can cast a wide net. Instead of spending a month to ask one question, we can ask several hundred and determine the ones that are really robust, and it’s about getting high-quality answers as fast as possible.”
For areas such as lending, DataRobot automated the process to eliminate bias in models. Since there are many ways to determine fairness, it provides an outline that helps organizations align values that matter to them, all centered on predictive analytics. Schuren said, “When it comes to algorithms and models, you can ask it questions on where it’s biased, and when you think about getting rid of bias within lending strategies, it’s done much easier with DataRobot.”
Addressing fraud continues to be top of mind for financial institutions: Banks faced more monthly fraud attacks in 2021 than the year prior, according to a study from LexisNexis Risk Solutions. The study also found the average volume of monthly fraud attacks for banks earning more than $10 million in annual revenue has increased since 2020 from 1,977 to 2,320.
Schuren explained that most fraud systems are driven by rule-based systems that evolve over time and could become as simple as identifying if a transaction is above a certain threshold. “Those rules can number in the thousands, and we’ve implemented a workflow that can be very useful where, within that process, if the transaction is safe, it goes right through, or a transaction can be flagged for review thanks to adding different machine-learning models along the way.”
The fraud team at a bank doesn’t have to invest extensive time and resources when an AI system such as DataRobot can train the models to reduce false positives. It all comes back to efficiency and saving time in the right places.
A real-life example showcases the technology in action. When Valley Bank’s anti-money laundering team sought to reduce the manual work involved in predictive modeling related to money laundering, it used DataRobot AI Cloud to optimize the AI life cycle. The result was decreasing total alert volume by 22% and increasing escalation to case by three percentage points.
“From ingesting the data to performing data quality to developing and testing models to deploying them … the platform does everything for us with minimal manual intervention. I haven’t found another tool that does that,” Chris Mendoza, director of financial crimes technology at Valley Bank, said in a statement.
Banks need to secure a competitive advantage in an increasingly tight race to harness best-in-breed technology. Decision makers need to not just plan a future-ready strategy, but also recognize the value of AI that could boost not just their performance in-house but also their reputation among their global customers.
Don’t know what to do this weekend? We’ve got you covered.
Our recommendations for your weekend.
Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Summer’s almost over, but there’s still time to check out some content. This week we’re excited to play Fortnite’s Dragon Ball Z event; “Prey” on Hulu includes some award-winning performances; and we can’t wait to spend the weekend with the comically sinister Cult of the Lamb.
Fortnite’s latest anime collab is really too good to miss. Following a successful crossover with the Naruto universe earlier this summer, Akira Toriyama’s “Dragon Ball Z” has finally landed in Epic’s battle royale, and it’s even better than we could have imagined. There are of course skins for purchase featuring protagonists Goku and Vegeta, and a quest tracker to unlock some other nice cosmetics for free. But it’s all the small touches — the in-game Kamehameha energy blast item and the ability to “power up” and transform your hair color, to name a few — that really push it over the edge and prove why Fortnite is truly at the forefront of the metaverse.
The story of the so-called crypto geniuses behind crypto hedge fund Three Arrows Capital — Kyle Davies and Su Zhu — is almost too unbelievable, and you can already sense the limited-time HBO series or feature film Hollywood producers might try to cook up from these details. By far the best accounting yet of what exactly happened with TAC comes from Jen Wieczner at New York Magazine, who chronicled the rise and fall of the fund in a new feature this week, dishing out some hilarious new details, including the name of the duo’s $50 million super yacht that now sits vacant in Italy while Davies and Zhu remain in hiding.
The Predator franchise isn’t exactly known for its sensitive portrayal of indigenous cultures. Yet, inexplicably, the new entry in the series about head-hunting alien assassins manages to accomplish many different things at once — including an award-worthy performance of a Comanche warrior from Sioux actress Amber Midthunder. The film features stellar action sequences and a refreshingly deep exploration of native gender roles as Midthunder’s Naru is pitted against a technologically advanced adversary.
Devolver Digital’s latest indie hit is Massive Monster’s Cult of the Lamb, an action-sim hybrid that blends elements of Animal Crossing with roguelike dungeon crawling. One part of the game involves growing a religious cult of followers through often vicious and manipulative means as part of a vengeful plot to strike back at the gods of old who sent you to be sacrificed. The other involves venturing into randomized dungeons to grow your following and strike your enemies down, all while providing for your growing religious order. The game’s comically sinister overtones mixed with its cartoony art style keep the overall tone light, but with enough depth to say something meaningful about the perils of organized religion.
A version of this story also appeared in today’s Entertainment newsletter; subscribe here.
Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Advocates are asking the federal government to block the plan so Indiana will come back to the bargaining table.
Indiana’s EV plan might not benefit all its citizens.
Kwasi (kway-see) is a fellow at Protocol with an interest in tech policy and climate. Previously, he covered global religion news at the Associated Press in New York. Before that, he was a freelance journalist based out of Accra, Ghana, covering social justice, health, and environment stories. His reporting has been published in The New York Times, Quartz, CNN, The Guardian, and Public Radio International. He can be reached at kasiedu@protocol.com.
Thanks to the Bipartisan Infrastructure Law, the state of Indiana is set to receive $100 million to build out a network of electric vehicle charging stations by 2025. But local officials and leaders of the NAACP in the state are calling on the Biden administration to reject the state’s plan, arguing that communities of color have been left out of the planning process, leading to a proposal that could entrench the racist transportation policies that both President Biden and Transportation Secretary Pete Buttigieg have vowed to address with these new federal funds.
“The state of Indiana has created a plan that is not equitable for communities of color, Black and brown,” said Henry Davis Jr., a city council member in South Bend, where Buttigieg was mayor. “We want to be included in that plan. It is kind of hard to be included on a plan when you are not even at the table.”
Davis is part of an alliance that includes the Indiana NAACP, Black Lives Matter South Bend and local Black business leaders. Among its top concerns is the fact that the Indiana Department of Transportation held just three in-person public meetings to accept input on the plan, all of which were located in predominantly white neighborhoods. There were no meetings in historically Black cities such as Gary, for instance. Instead, the meeting for the northern section of the state was held in the much smaller city of Plymouth, where the population is 90% white. These meetings were also scheduled from 3 p.m. to 5 p.m., making it difficult — if not impossible — for many working people to attend.
But arguably the bigger issue, alliance members say, is the plan itself, which makes fleeting mention of the state’s commitment to equitable distribution of charging stations but is light on details about how exactly the state plans to go about achieving those goals. “There are these systems that need to be changed, that need to include us in this green economic transition,” said Denise Abdul-Rahman, state chair of environmental and climate justice for the Indiana NAACP.
Expanding access to electric vehicle infrastructure in communities of color has been top of mind for policymakers. The Biden administration has committed to ensuring that 40% of all federal climate and energy investments benefit disadvantaged communities. Buttigieg has spoken at length about the need to correct the racist history of transportation in America. And Indiana’s own state law also requires electric vehicle charging infrastructure “to be located in an equitable manner” and to be convenient for people living in areas that are “economically [distressed] or racially or ethnically diverse.”
But the standoff in Indiana over charging stations reflects a pervasive concern in communities of color that the EV transition will leave them out. Racial disparities in access to charging stations are already apparent in cities across the country. The new federal funding presents an opportunity to close the gap and encourage greater adoption of electric vehicles in communities of color. That’s crucial, given that they’re disproportionately impacted by the climate crisis. “There has to be an intentional effort to support the discussion about Black and brown communities receiving the investment,” Davis Jr. said. “We just can’t keep giving lip service.”
Scott Manning, Indiana’s deputy chief of staff for the Department of Transportation, acknowledged that while the in-person meetings may have been difficult for many to attend, the state did provide other avenues for public comments, including two virtual meetings and an online survey. According to the draft report, about 2,300 people responded, with comments coming from all but one county in the state.
The department also noted in its EV plan that it consulted with groups including the NAACP and the South Bend chapter of Black Lives Matter, but those meetings were not open to the public.
The plan has already been submitted for federal approval, but Manning emphasized that it is a “living document,” and that there will be further community outreach. “We do have the opportunity to be flexible with where the charging stations are ultimately located, provided that we are locating in sites that meet [the National Electric Vehicle Infrastructure program] requirements,” he said.
But local advocates say the NEVI requirements may wind up hurting rather than helping their cause. Under the $5 billion program, through which Indiana will get its $100 million, states are required to prioritize placement of charging stations along highways before local roads.
That, Abdul-Rahman worries, could mean chargers winding up in areas that aren’t convenient to the local community and don’t ultimately benefit local businesses. Her organization is looking for assurances that charging stations will not only be located in communities of color, but that Black-owned businesses will be included in procurement contracts and job programs related to the new technology.
The federal government now has until Sept. 30 to consider the state’s plan. According to Manning, there are no signs yet the plan will be rejected. But Abdul-Rahman, Davis and others are still hoping it will be, forcing decision-makers in Indiana to come back to the bargaining table — with more seats around it this time.
Kwasi (kway-see) is a fellow at Protocol with an interest in tech policy and climate. Previously, he covered global religion news at the Associated Press in New York. Before that, he was a freelance journalist based out of Accra, Ghana, covering social justice, health, and environment stories. His reporting has been published in The New York Times, Quartz, CNN, The Guardian, and Public Radio International. He can be reached at kasiedu@protocol.com.
The corporate minimum tax law passed, but the battle of some key provisions is just getting started.
The long-awaited corporate tax reform should in theory be a big deal, but markets hardly flinched after it became clear the Inflation Reduction Act would pass.
Hirsh Chitkara ( @HirshChitkara) is a reporter at Protocol focused on the intersection of politics, technology and society. Before joining Protocol, he helped write a daily newsletter at Insider that covered all things Big Tech. He’s based in New York and can be reached at hchitkara@protocol.com.
When President Biden signed the Inflation Reduction Act into law on Wednesday, he put in place a 15% minimum tax rate for all large U.S. corporations.
The long-awaited corporate tax reform should in theory be a big deal, but markets hardly flinched after it became clear the legislation would pass. And tech companies — which pulled out all the stops to hinder Sen. Amy Klobuchar’s antitrust bill — hardly resisted the measure, even if their interest groups dutifully issued statements of opposition. Tim Cook didn’t swing by D.C., there were no mass fly-ins and no casting calls went out for the part of Joe America in stilted political attack ads.
So why didn’t the tech sector fight harder against a law that Democrats say hits them where it hurts? Mitchell Kane, a tax professor at New York University Law School, gave Protocol three possible explanations: First, the deal came together too quickly for corporations to react. Second, the incremental tax cost could be little to nothing. And third, corporations may have preferred the 15% plan to something worse.
The deal did indeed come together quickly, as Sens. Joe Manchin and Kyrsten Sinema decided at the last minute to support a bill that many had already written off as dead. This timing played in corporations’ favor in some ways, since it forced progressives to give up on more ambitious plans to raise the corporate tax rate to 28%.
It’s also true that many tech companies will feel no impact from the new minimum. An analysis from the Joint Committee on Taxation found that only around 30% of the Fortune 500 will be impacted by the new minimum tax, and those companies are concentrated in industries such as manufacturing. Meta, Microsoft and Apple all paid more than 15% cash effective tax rates last year, according to a Washington Post analysis. Overall, the new minimum is expected to raise corporate tax revenue by less than 5% within the next decade.
Companies make two calculations under the new minimum tax system. The first is the standard taxable income calculation that allows for all the existing deductions. The second calculation, which sets the new minimum, starts with the financial statement income — what a company reports to the SEC and investors — and allows for adjustments including research and development costs, accelerated depreciation and climate investments. If 15% of the second calculation isn’t larger than the original tax calculation, then corporations must pay a top-up tax to ensure they’re meeting the minimum threshold.
Even tech companies currently paying tax rates below 15% could be in the clear. The allowances have the potential to give considerable offsets to tech companies, especially for R&D. Companies such as Nvidia and Intel both paid estimated cash effective tax rates below 15% in recent years, but their businesses also require exceptionally high R&D costs. Those costs can still be deducted under the new plan.
R&D deductions are particularly beneficial for companies since the benefits last a long time and the resulting intellectual property can often be transferred offshore to avoid U.S. taxes. It is precisely this upside that many critics say is unfair: To put it simply, the U.S. tax policy allows companies to deduct R&D expenses and also later to shield much of the subsequent revenue.
Nixing the R&D deduction was never under consideration, according to Reuven S. Avi-Yonah, a law professor at the University of Michigan who advised Sen. Elizabeth Warren on the Real Corporate Profits Tax Act introduced last year.
“It’s the international part that I find interesting,” Avi-Yonah told Protocol. “What we have here is essentially a tax on their global profits at 15% because for book [accounting] purposes you include all their foreign operations in one big pile with their domestic ones.”
The biggest open question for tech companies is whether stock-based compensation will be allowed as an offset for the minimum tax calculation. In 2021, for example, Amazon paid out $12.8 billion in stock-based compensation, allowing the company to reap $2.7 billion in tax benefits.
“The biggest difference for many tech companies between their taxable income and their book income is stock option gain,” Peter Barnes, counsel to D.C. law firm Caplin & Drysdale, told Protocol. The stock option gain can be deducted from taxable income, Barnes explained, even as it doesn’t count against book income. Corporations have long argued that the government should support the deduction because it encourages good corporate behavior, aligning the interests of employees and owners.
The Inflation Reduction Act contains no mention of stock-based compensation, but that doesn’t necessarily mean it won’t be included. The IRS and Department of Treasury’s Office of Tax Policy will likely spend several years translating the legislation written by Congress into the tax code.
“They changed the law significantly in 2017, and it took the IRS three [or] four years to come out with the detailed regulations on most of these things,” Avi-Yonah told Protocol. “For this one, I think it will take at least as long because, conceptually, it’s a really different kind of tax.”
This lengthy process gives tech companies ample opportunity to make their voices heard. There will likely even be several rounds of solicitation periods in which the IRS will ask for public comment, present drafts and then solicit more comments. By the time this process gets into full swing, companies may very well be dealing with a Republican-led House and Senate, in turn creating an easier path for winning additional concessions. At the end of the day, though, the new rules only set the minimum — the old rules still matter.
Hirsh Chitkara ( @HirshChitkara) is a reporter at Protocol focused on the intersection of politics, technology and society. Before joining Protocol, he helped write a daily newsletter at Insider that covered all things Big Tech. He’s based in New York and can be reached at hchitkara@protocol.com.
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