Google image at stake amid taxing issue in Europe
The "Google tax" badly needs a dictionary definition. Both Spain and Britain recently introduced one, but the two measures are completely different. Surely, journalists use the search giant's name for click bait, but their choice also signals that in Europe Google has come to embody the evil excesses of the US-dominated technology industry.
The "Google tax" badly needs a dictionary definition. Both Spain and Britain recently introduced one, but the two measures are completely different. Surely, journalists use the search giant's name for click bait, but their choice also signals that in Europe Google has come to embody the evil excesses of the US-dominated technology industry.
The Spanish version of the "Google tax" is a payment to the Association of Editors of Spanish Dailies, a media industry group, for the right to publish links to, and excerpts from, news stories. This is not the first time Google has been hit with something of this kind: Germany and Belgium imposed similar levies, only for the search company to fight back by pulling links to content produced by the measures' proponents. Traffic dropped and media groups in the two countries agreed not to demand payment.
In Spain, Google is trying a more holistic approach. Richard Gingras, head of Google News, said in a blog post yesterday: "Sadly, as a result of a new Spanish law, we'll shortly have to close Google News in Spain. Let me explain why. This new legislation requires every Spanish publication to charge services like Google News for showing even the smallest snippet from their publications, whether they want to or not. As Google News itself makes no money [we do not show any advertising on the site], this new approach is simply not sustainable. So it's with real sadness that on 16 December [before the new law comes into effect in January], we'll remove Spanish publishers from Google News and close Google News in Spain."
As elsewhere, this probably is not the end of the story: Google expects Spanish publishers to rebel against the legislation and for parliament to then cancel it.
Britain's "Google tax" is a different kettle of fish. It is supposed to be payable to the government, not a lobby group, and could potentially cost Google and other multinationals serious money. If parliament approves the proposed "diverted profits tax", Britain would have a discretionary right to determine whether a firm is using "contrived arrangements" to move profits from its British business to other jurisdictions. If suspected of doing so, the company would be charged 25 per cent of those profits, four percentage points more than the standard corporate tax rate, on a "pay first, argue later" basis.
Google, for example, does not have a British presence for tax purposes. It declares about US$5 billion a year in British-generated advertising revenues in Ireland and then pays out most of that money to a Bermudan subsidiary as royalties for intellectual property. It will surely be one of the first companies to be slapped with the new tax, hence the "Google tax" headlines.
Google and its peers will fight the proposed British levy. As with the content levies and attempts to make Google separate its search engine from other services, there is no easy way to make the search giant change the way it does business: Google is run by smart lawyers and accountants, as well as engineers. Besides, its successful projects such as the search engine, Google News, the Android mobile operating system and Gmail deliver important benefits to consumers; their support allows the company to fight back boldly.
Still, Google is being attacked on so many different fronts, especially in Europe, that its image as a force for good is eroding. That is a more subtle problem than a new tax, but it did hurt Microsoft Corp in its day. Once the US software maker became an evil empire to many users, alternatives to its products began to spring up; by now the dominance of the Windows operating system over personal computing is a thing of the past. Google is also vulnerable to such a fate. Playing nice on taxes - if not on news copyright - could help the company stave it off.
