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From Google to Amazon: EU goes to war against power of US digital giants

77 points by rpm4321 12y ago

ulfw 12y ago
It's about time that something is done about taxation. It can't be that US companies earn billions of dollars in EU nations but pay almost no tax (either in the EU or the US). As a simple employee I cannot evade taxes (and might have to pay double taxes in the EU and US if I am a US citizen/perm resident working in the EU), yet large corporations can.
- kghose 12y ago
  See how easily the politicos make it about you against me, when we should be working together. Dude, if you are European, and you make good software, I'll use it. In fact, I use a ton of software made by people who, by chance, were born in Europe. But the moment you start to rail against 'US companies' (I work in a US company) I begin to think, waitaminuite, that guy is against me - he wants to hurt me, maybe I shouldn't use his stuff either ...
  - yulaow 12y ago
    I don't think it is about asking to "not use something". It is about asking to pay taxes where you gain money. To have a equal system any vendor should pay in a specific state the part of taxes related to what he sold in that specific state. It is really incredible that if I sell the 99.99% of my product out of Luxembourg I pay all taxes only in Luxembourg, for example. (edit obviously using the various holes in the EU law system)
  - danmaz74 12y ago
    What is actually absurd is that those companies don't pay those taxes in the US either, because they can keep the money in fiscal havens for ages...
    - mike_hearn 12y ago
      No. You read about money sitting in the Caribbean because the US tax system is broken and tries to tax money made anywhere in the world (this makes no sense, and no other country does this). BUT .... that doesn't mean they avoid the US taxes! For Google the money ends up sitting in Bermuda: not a place noted for its abundance of cheap colo space or computer scientists. Obviously it isn't going to stay there because there's nothing to spend it on. Instead the money sits offshore until something more useful is found. What US companies want to happen is that the US Govt puts in place a "tax holiday" in which they temporarily stop being idiots and use the same tax rules as the rest of the world, thus allowing those companies to move the money earned abroad back into the USA without it being taxed twice (once by the country where it was earned and once by Uncle Sam). This has happened before so they think maybe it'll happen again. Then they can spend it on building fancy offices and hiring splurges, all of which yields taxable income inside the USA. What actually tends to happen is that politicians, even the ones that acknowledge the sense of this, don't like being seen to give big companies a tax break. So they prevaricate and eventually the money gets spent abroad in places like Europe or Asia, where double taxation treaties work properly. At that point the money gets taxed via payroll taxes, employee income taxes, VAT etc. Own goal for America. Still ... the money doesn't sit there because they want to avoid US taxes. They generally want to avoid double taxation, and then spend the money saved inside the USA.
      - danmaz74 12y ago
        What double taxation? They are NOT taxed in Europe, that's the whole point!!
        mike_hearn 12y ago
        They are indeed taxed in Europe! The rate paid is low (until the money moves back around) but tax is paid.
        danmaz74 12y ago
        It's not a low rate. It's an accounting trick, which moves almost all the taxable profits to a fiscal haven, and this is possible exactly because there is NO double taxation.
- venomsnake 12y ago
  What i would do is system of minimum taxation. Like - all money made in Germany will be taxed at 20% and you pay your taxes with priority where you are incorporated. So if in Luxemburg the taxation is 5% - you pay 5% to luxemburg but cough the rest 15% to germany on the profits made in germany.
  - mahyarm 12y ago
    That is pretty standard already. You usually get tax credits for foreign paid tax. The key is do they have the jurisdiction to tax you in the first place? If you only have a factory & employees in Luxemburg and just exported your product to the rest of the EU, is it really fair to tax you at Scandinavian tax rates for example?
    - DanBC 12y ago
      Personally I would see the company you describe as being a Luxemburg company, and subject to their tax rates. But when you have English customers buying product in English shops from your English staff in your English branches - well, that sounds like an English business. To then have a Luxemburg company that sells very expensive coffee beans to those English coffee shops, thus making those shops operate at a loss but making the coffee roasting Luxemburg business very wealthy - that's just a scam and it needs to be shut down. How to shut it down when you're coordinating the tax raising laws of many different countries is going to take some time.
      - mike_hearn 12y ago
        But that's arbitrary. If the Luxembourg company opens up a sales office in Sweden, but it has only 4 employees and there are 500 in Luxembourg, does that suddenly mean all those companies sales to Sweden get taxed twice? If so why would they ever open up an office there? Why not just insist customers fly to Luxembourg and visit their office instead? Governments are whipping up a mob over this issue and aren't thinking it through. Does Google really need an office in London? No. One exists there because, in the absence of other factors, it makes sense to hire internationally so you can access good employees who might not want to live in America (or vice versa). But if the first Google employee who started work in the UK suddenly meant ALL money coming from UK based customers got taxed twice, that first employee would never make financial sense. Companies just wouldn't do it. They'd insist the employees moved to them instead of them moving to the employees. This outcome makes no sense, but in their desperate quest to squeeze ever more blood out of the stone, maybe that's where governments are going to take us ...
chris_va 12y ago
You have to love politicians ability to dissemble and appeal to emotion rather than just fix the problem. 1) Taxes: This tax structure is legal, and used by the majority of large international companies operating in the EU. The EU has the power to change it, if it wants to, rather than just bitch about it. The US will also get its chance to tax this money, if Google/Amazon ever bring it back into the US (the US, unlike the rest of the planet, loves to tax companies for money made elsewhere). 2) Data: Data retention and anonymity is actually fairly regulated by the EU and the US (sometimes conflictingly). It is again within the power of the EU to change their regulations, which they have done in the past, instead of just bitching about it. 3) Antitrust: I like how they play up the search result "alleged" anti-trust angle. There are anti-trust laws on the books in all of these countries, and there were even congressional hearings in the US about this topic (which found nothing). Unless they are implying that the legal system in the EU is broken, I don't get why the politician is banging the drum on this one.
- DanBC 12y ago
  > This tax structure is legal, Some corporations really stretch the boundaries of legality. See, for example, Starbucks. Starbucks (the beanroasters) sell very expensive beans to Starbucks (the coffee shops). This weird set-up means that Starbucks (the coffee shop) in the UK makes no profit and thus pays very little tax. While the company is not evading tax, and will have legal advice telling them their systems are legal, we don't really know for some of the schemes until they're tested in court. And it's expensive to take all these very rich multinational tax-avoiders to court, so we end up with deals being done. (See Vodafone paying a very small amount of the avoided tax after their scheme was shut down.)
  - chris_va 12y ago
    Starbucks also makes very little net margin the US, and as an entity pays very little in taxes directly, but that does not mean that the US does not make a lot of tax revenue from Starbucks. After cost of goods, the gross margin is spent on operations like payroll, marketing, logistics, etc. Each entity in the line pays some form of tax (e.g. VAT in the UK, sales in the US), not to mention the billions in payroll taxes. It is also surprising that litigation would be seen as so cost-ineffective. Google gets sued 100s of times per year, and I suspect the UK government would have a lot more to gain than the typical claimant.
IBM 12y ago
Bad for the digital giants and their shareholders, good for the public. Silicon Valley has skated by with very little privacy regulation, but the tide is turning.
- api 12y ago
  It's part of a growing movement to reject feudal and surveillance based business models. Those business models are largely an artifact of the dot.com bust and the need to find some way to make "free" pay... they're a recent development, probably not a permanent one, and are not synonymous with Silicon Valley. For most of it modern incarnation -- say 1970 to present -- Silicon Valley was all about personal computing and democratizing technology. Hopefully it can return to its roots.
  - jeangenie 12y ago
    > surveillance based business models OT but I was watching a docu- on Goldman Sachs and found interesting parallels between the rise of the "surveillance" model in the tech sector and the financial sector. They both succeed based upon the successful monetization of customer data. That may be the content of your emails searches in Google's case or a client's trading position in Goldman's but the goal is the same.
    - api 12y ago
      Interesting question: Do we know for a fact that Google does not monetize its e-mail data by -- say -- offering insights to traders or hedge funds? Boy would that ever be valuable.
- maximumoverload 12y ago
  As a citizen of EU, I very much doubt it. Most of the technical revolutions in the past decade(s) was brought to us by the giants. Never by the governments. The most that will happen is more variants of the demented "cookie law" and "Google deletion law".
  - 12y ago
msh 12y ago
But the sad thing is that the european alternatives to the sectors they mention like gmail is either bad or expensive euro hosted american software (hosted exchange) which is not priced to reach the average customer. I would prefer a EU alternative to gmail but none exist (by gmail I think of the whole suite with email, contact and calendar that all have a good webinterface and at the same time provide good sync to mobile devices).
- oever 12y ago
  Internet providers in Europe often also provide webmail. Zarafa, MyColab,and OpenXChange are European providers of large deployment webmail software. Sadly there is a lot of GMail and Microsoft exchange in use even in local and national governments.
- VMG 12y ago
  Plus there's no reason to assume a EU company doesn't spy on you. Europe has secret services too.
  - danieldk 12y ago
    But this (the article) is not necessarily about spying. It's about (1) large US companies gaining too much power over crucial infrastructure used by EU citizens; and (2) tax evasion schemes. The EU wants to regulate the tech sector more, treating companies that provide critical infrastructure as utility companies. Given that internet has become as important in many companies (and even households) as electricity and water, something's to be said for that. IMO it would for example be better if lock-in was reduced through requiring that large tech companies adhere to standards. Choice is good, and it would be awful if you couldn't move e-mail from Google Mail to another service because Google removed IMAP support (which is a future possibility).
    - VMG 12y ago
      Got it, good old protectionism. I noticed Springer in the article, no surprise there. Just looking out for my best interests and giving me choice by restricting what products companies can offer.
Entalpi 12y ago
I stopped reading after " / ... / data is replacing fossil fuels as the most valuable resource on Earth.".
- zghst 12y ago
  That is actual an understatement, information has and always will be powerful. Do you wonder why the US, China and Russia invest so much in spying on each other and everyone else?
jqm 12y ago
Email and the like are fairly easy to replace. The one thing Google has that so far I have not seen seriously challenged is search. Sure there are other search engines but none really compare in my experience when it gets down to it. If you hobble your citizens from performing the best possible searches you are putting your society at a long term disadvantage in my opinion. Search really is that important in this day and age. The answer isn't regulation. The answer is to build a better search engine.
- DanBC 12y ago
  Some people are finding Google's increased fuzziness very frustrating to use. The lack of ability to specify what should be searched for hinders some searches. So, there are some spaces for search: 1) better site specific searching. Searching Wikipedia for misspellings (in order to fix them) is frustrating. Searching Amazon is bafflingly awful - I honestly do not understand how Amazon search can stay so so terrible. 2) boolean style operators and stemming choices. 3) I dislike being kept in an English language bubble.
- Omniusaspirer 12y ago
  That becomes tricky when you acknowledge that the primary reason Google search is fantastic is because they have zero respect for your privacy. You absolutely have a search profile formed with your browsing history which has a massive impact on the results you see when searching whatever query.
  - mike_hearn 12y ago
    Hardly. Many people use Google search without being logged in at all. Chrome pioneered the Incognito mode. You can disable web search history (and I have). There's plenty of respect for your privacy there, you just have to indicate your preference. Anyway. Personalisation improves search results somewhat. It does not improve them as much as, say, a good spelling corrector. Source: I used to work at Google.
- Vik1ng 12y ago
  And how do you beat google on search when google is the one with a tracker on almost every important website out there? The search engine which gets the most traffic and can analyze and optimize it? Not to mention the cost to crawl the web 24/7/365 which is the same no matter how many people use your search engine.

77 points by rpm4321 12y ago

ulfw 12y ago

It's about time that something is done about taxation. It can't be that US companies earn billions of dollars in EU nations but pay almost no tax (either in the EU or the US). As a simple employee I cannot evade taxes (and might have to pay double taxes in the EU and US if I am a US citizen/perm resident working in the EU), yet large corporations can.

kghose 12y ago
See how easily the politicos make it about you against me, when we should be working together. Dude, if you are European, and you make good software, I'll use it. In fact, I use a ton of software made by people who, by chance, were born in Europe. But the moment you start to rail against 'US companies' (I work in a US company) I begin to think, waitaminuite, that guy is against me - he wants to hurt me, maybe I shouldn't use his stuff either ...
- yulaow 12y ago
  I don't think it is about asking to "not use something". It is about asking to pay taxes where you gain money. To have a equal system any vendor should pay in a specific state the part of taxes related to what he sold in that specific state. It is really incredible that if I sell the 99.99% of my product out of Luxembourg I pay all taxes only in Luxembourg, for example. (edit obviously using the various holes in the EU law system)
- danmaz74 12y ago
  What is actually absurd is that those companies don't pay those taxes in the US either, because they can keep the money in fiscal havens for ages...
  - mike_hearn 12y ago
    No. You read about money sitting in the Caribbean because the US tax system is broken and tries to tax money made anywhere in the world (this makes no sense, and no other country does this). BUT .... that doesn't mean they avoid the US taxes! For Google the money ends up sitting in Bermuda: not a place noted for its abundance of cheap colo space or computer scientists. Obviously it isn't going to stay there because there's nothing to spend it on. Instead the money sits offshore until something more useful is found. What US companies want to happen is that the US Govt puts in place a "tax holiday" in which they temporarily stop being idiots and use the same tax rules as the rest of the world, thus allowing those companies to move the money earned abroad back into the USA without it being taxed twice (once by the country where it was earned and once by Uncle Sam). This has happened before so they think maybe it'll happen again. Then they can spend it on building fancy offices and hiring splurges, all of which yields taxable income inside the USA. What actually tends to happen is that politicians, even the ones that acknowledge the sense of this, don't like being seen to give big companies a tax break. So they prevaricate and eventually the money gets spent abroad in places like Europe or Asia, where double taxation treaties work properly. At that point the money gets taxed via payroll taxes, employee income taxes, VAT etc. Own goal for America. Still ... the money doesn't sit there because they want to avoid US taxes. They generally want to avoid double taxation, and then spend the money saved inside the USA.
    - danmaz74 12y ago
      What double taxation? They are NOT taxed in Europe, that's the whole point!!
      - mike_hearn 12y ago
        They are indeed taxed in Europe! The rate paid is low (until the money moves back around) but tax is paid.
        danmaz74 12y ago
        It's not a low rate. It's an accounting trick, which moves almost all the taxable profits to a fiscal haven, and this is possible exactly because there is NO double taxation.
venomsnake 12y ago
What i would do is system of minimum taxation. Like - all money made in Germany will be taxed at 20% and you pay your taxes with priority where you are incorporated. So if in Luxemburg the taxation is 5% - you pay 5% to luxemburg but cough the rest 15% to germany on the profits made in germany.
- mahyarm 12y ago
  That is pretty standard already. You usually get tax credits for foreign paid tax. The key is do they have the jurisdiction to tax you in the first place? If you only have a factory & employees in Luxemburg and just exported your product to the rest of the EU, is it really fair to tax you at Scandinavian tax rates for example?
  - DanBC 12y ago
    Personally I would see the company you describe as being a Luxemburg company, and subject to their tax rates. But when you have English customers buying product in English shops from your English staff in your English branches - well, that sounds like an English business. To then have a Luxemburg company that sells very expensive coffee beans to those English coffee shops, thus making those shops operate at a loss but making the coffee roasting Luxemburg business very wealthy - that's just a scam and it needs to be shut down. How to shut it down when you're coordinating the tax raising laws of many different countries is going to take some time.
    - mike_hearn 12y ago
      But that's arbitrary. If the Luxembourg company opens up a sales office in Sweden, but it has only 4 employees and there are 500 in Luxembourg, does that suddenly mean all those companies sales to Sweden get taxed twice? If so why would they ever open up an office there? Why not just insist customers fly to Luxembourg and visit their office instead? Governments are whipping up a mob over this issue and aren't thinking it through. Does Google really need an office in London? No. One exists there because, in the absence of other factors, it makes sense to hire internationally so you can access good employees who might not want to live in America (or vice versa). But if the first Google employee who started work in the UK suddenly meant ALL money coming from UK based customers got taxed twice, that first employee would never make financial sense. Companies just wouldn't do it. They'd insist the employees moved to them instead of them moving to the employees. This outcome makes no sense, but in their desperate quest to squeeze ever more blood out of the stone, maybe that's where governments are going to take us ...

chris_va 12y ago

You have to love politicians ability to dissemble and appeal to emotion rather than just fix the problem. 1) Taxes: This tax structure is legal, and used by the majority of large international companies operating in the EU. The EU has the power to change it, if it wants to, rather than just bitch about it. The US will also get its chance to tax this money, if Google/Amazon ever bring it back into the US (the US, unlike the rest of the planet, loves to tax companies for money made elsewhere). 2) Data: Data retention and anonymity is actually fairly regulated by the EU and the US (sometimes conflictingly). It is again within the power of the EU to change their regulations, which they have done in the past, instead of just bitching about it. 3) Antitrust: I like how they play up the search result "alleged" anti-trust angle. There are anti-trust laws on the books in all of these countries, and there were even congressional hearings in the US about this topic (which found nothing). Unless they are implying that the legal system in the EU is broken, I don't get why the politician is banging the drum on this one.

DanBC 12y ago
> This tax structure is legal, Some corporations really stretch the boundaries of legality. See, for example, Starbucks. Starbucks (the beanroasters) sell very expensive beans to Starbucks (the coffee shops). This weird set-up means that Starbucks (the coffee shop) in the UK makes no profit and thus pays very little tax. While the company is not evading tax, and will have legal advice telling them their systems are legal, we don't really know for some of the schemes until they're tested in court. And it's expensive to take all these very rich multinational tax-avoiders to court, so we end up with deals being done. (See Vodafone paying a very small amount of the avoided tax after their scheme was shut down.)
- chris_va 12y ago
  Starbucks also makes very little net margin the US, and as an entity pays very little in taxes directly, but that does not mean that the US does not make a lot of tax revenue from Starbucks. After cost of goods, the gross margin is spent on operations like payroll, marketing, logistics, etc. Each entity in the line pays some form of tax (e.g. VAT in the UK, sales in the US), not to mention the billions in payroll taxes. It is also surprising that litigation would be seen as so cost-ineffective. Google gets sued 100s of times per year, and I suspect the UK government would have a lot more to gain than the typical claimant.

IBM 12y ago

Bad for the digital giants and their shareholders, good for the public. Silicon Valley has skated by with very little privacy regulation, but the tide is turning.

api 12y ago
It's part of a growing movement to reject feudal and surveillance based business models. Those business models are largely an artifact of the dot.com bust and the need to find some way to make "free" pay... they're a recent development, probably not a permanent one, and are not synonymous with Silicon Valley. For most of it modern incarnation -- say 1970 to present -- Silicon Valley was all about personal computing and democratizing technology. Hopefully it can return to its roots.
- jeangenie 12y ago
  > surveillance based business models OT but I was watching a docu- on Goldman Sachs and found interesting parallels between the rise of the "surveillance" model in the tech sector and the financial sector. They both succeed based upon the successful monetization of customer data. That may be the content of your emails searches in Google's case or a client's trading position in Goldman's but the goal is the same.
  - api 12y ago
    Interesting question: Do we know for a fact that Google does not monetize its e-mail data by -- say -- offering insights to traders or hedge funds? Boy would that ever be valuable.
maximumoverload 12y ago
As a citizen of EU, I very much doubt it. Most of the technical revolutions in the past decade(s) was brought to us by the giants. Never by the governments. The most that will happen is more variants of the demented "cookie law" and "Google deletion law".
- 12y ago

msh 12y ago

But the sad thing is that the european alternatives to the sectors they mention like gmail is either bad or expensive euro hosted american software (hosted exchange) which is not priced to reach the average customer. I would prefer a EU alternative to gmail but none exist (by gmail I think of the whole suite with email, contact and calendar that all have a good webinterface and at the same time provide good sync to mobile devices).

oever 12y ago
Internet providers in Europe often also provide webmail. Zarafa, MyColab,and OpenXChange are European providers of large deployment webmail software. Sadly there is a lot of GMail and Microsoft exchange in use even in local and national governments.
VMG 12y ago
Plus there's no reason to assume a EU company doesn't spy on you. Europe has secret services too.
- danieldk 12y ago
  But this (the article) is not necessarily about spying. It's about (1) large US companies gaining too much power over crucial infrastructure used by EU citizens; and (2) tax evasion schemes. The EU wants to regulate the tech sector more, treating companies that provide critical infrastructure as utility companies. Given that internet has become as important in many companies (and even households) as electricity and water, something's to be said for that. IMO it would for example be better if lock-in was reduced through requiring that large tech companies adhere to standards. Choice is good, and it would be awful if you couldn't move e-mail from Google Mail to another service because Google removed IMAP support (which is a future possibility).
  - VMG 12y ago
    Got it, good old protectionism. I noticed Springer in the article, no surprise there. Just looking out for my best interests and giving me choice by restricting what products companies can offer.

Entalpi 12y ago

I stopped reading after " / ... / data is replacing fossil fuels as the most valuable resource on Earth.".

zghst 12y ago
That is actual an understatement, information has and always will be powerful. Do you wonder why the US, China and Russia invest so much in spying on each other and everyone else?

jqm 12y ago

Email and the like are fairly easy to replace. The one thing Google has that so far I have not seen seriously challenged is search. Sure there are other search engines but none really compare in my experience when it gets down to it. If you hobble your citizens from performing the best possible searches you are putting your society at a long term disadvantage in my opinion. Search really is that important in this day and age. The answer isn't regulation. The answer is to build a better search engine.

DanBC 12y ago
Some people are finding Google's increased fuzziness very frustrating to use. The lack of ability to specify what should be searched for hinders some searches. So, there are some spaces for search: 1) better site specific searching. Searching Wikipedia for misspellings (in order to fix them) is frustrating. Searching Amazon is bafflingly awful - I honestly do not understand how Amazon search can stay so so terrible. 2) boolean style operators and stemming choices. 3) I dislike being kept in an English language bubble.
Omniusaspirer 12y ago
That becomes tricky when you acknowledge that the primary reason Google search is fantastic is because they have zero respect for your privacy. You absolutely have a search profile formed with your browsing history which has a massive impact on the results you see when searching whatever query.
- mike_hearn 12y ago
  Hardly. Many people use Google search without being logged in at all. Chrome pioneered the Incognito mode. You can disable web search history (and I have). There's plenty of respect for your privacy there, you just have to indicate your preference. Anyway. Personalisation improves search results somewhat. It does not improve them as much as, say, a good spelling corrector. Source: I used to work at Google.
Vik1ng 12y ago
And how do you beat google on search when google is the one with a tracker on almost every important website out there? The search engine which gets the most traffic and can analyze and optimize it? Not to mention the cost to crawl the web 24/7/365 which is the same no matter how many people use your search engine.