Forget tax bills, here's how Google is really taking us all for a ride Here are a few predictions: Google will shrug off last week's tax scrutiny with a flick of its robotic tail; politicians and campaigners will declare this a "success"; and the much greater toll Google and other multinationals take on the global economy will be ignored. The protestors, upset about the tiny corporation tax bills …
Frankly I don't care -
Sure my ISP could offer me a mail service at 25p per year - but it wouldn't be as good or as available everywhere as the "free" offering I get from Google. Sure I could buy a TomTom and get a decent GPS solution for the car (been here done this) but it wouldn't be as reliable or up-to-date as the "free" offering I get from Google.
It is not AT ALL the case that Google is stifling competition - all it means is that the other players need to learn how to compete - if all they can do is offer a substandard service - they made their own beds.
We are talking about a web company - and the one sure thing we all know about web companies - is they can fall just as fast as they can rise.
Seems to me like it would be more sensible to take a small top line tax - lets say 2% rather than try to milk profits (which shareholders/owners etc are incentivized to maximize). Then you can say "invoice issued from country X pays has the country X tax". The problem with that is governments taxation then becomes very clear and they are then obviously the people hiking up prices. This is quite clearly seen now with the various aviation taxes if you fly. more often than not on long haul flights the taxes cost more than the flight.
So governments want the money, but they don't always want to be seen to take the money, or add it onto everyone else's bill.
> the annual consumer surplus of free services such as Facebook and Gmail at €100bn a year
This is the economics of the record companies. Assuming that a "thing" that someone downloads for free would be a "thing" they would have paid full price for and therefore the lost revenue is whatever they say it is. We all know (except the lawyers in record companies and the judges they own) that there's not a single shred of reality in this argument and that the difference between giving (or getting) something for 0 pence and having to pay 1p for it is huge, massive, enormous, possibly infinite!
So no, I don't buy the idea that Google and its ilk are blocking a more profitable internet market - one where people would pay for what they now get for free. If everything that Google "gives" away had a fee attached, the internet would be back in the 1990's, with a level of e-commerce to match. Now that might suit the bricks and mortar shops, with their unsustainable overheads and staff levels. But for consumers the internet is the best thing since slicedbread.com (although as websites go, that one is pretty poor, and noisy).
Google might not pay much tax directly - though it does pay what it's requireed to by law. However the amount of tax revenue it has enabled through internet buying and all the online businesses that have grown up simply by being successful and satisfying searches for whatever goods or services they sell, is huge, massive, enormous, possibly infinite. It's justa shame that so few of those companies are in the UK.
Shame on McKinsey for pretending that you wouldn't get the same accounting run around once the corporate tax rate was 15% everywhere. Generally acceptable accounting practices and double entry bookkeeping (with a single set of books) prevent embezzling not tax minimizing.
Have you thought about all the opportunities of making money that got killed because of the advent of Internet? How many billions would people agree to pay for services that have become completely unnecessary because the Internet exists and has made them obsolete? Google even had the unmitigated gall to make Internet easy to use! All that money drained from the global economy!
And don't forget how the invention of the damn telephone killed the letter delivery business, and killed off so much tax revenue.
Saying that '25p per account isn't much but spread over millions of users it is enough to run a business' is not a reasonable assessment. If we assume that this is capitalism then 'enough to run a business' is not a successful implementation of the philosophy. The idea is to create wealth and in a service economy the only way to so this is to generate more than necessary in order to fund future growth and profits for stakeholders. Few businesses are founded on the idea of 'getting by', most are hoping for a big win. If giving away a service results in growth in other areas of that business and users/customers accept it then so be it, the market has spoken. Hobbling potential competitors in an attempt to get as much money as possible is the very essence of capitalism whereas imposing arbitrary limitations on 'enough' is getting creepily close to a much different and social form of commerce.
Additionally, the potential for business of $(x)Millions if businesses didn't give certain services away is the RIAA argument reversed. The value of the services provided is exactly zero, the value of information from those services is immense but is a different 'line item'.
I'm not a big fan of anything that lets the market create difficult-to-compare plans - mobile phone plans are already a pain in the arse. The current system mostly works - if you want better, ad-free email, you can pay for it.
If the idea is simply to create an easy micropayment mechanism, then fine - a cheap, easy to use and integrate, ubiquitous Paypal alternative would be fantastic. I'd prefer it not be linked to my ISP though, as the other reason people (including me) use services like Gmail is to avoid roadblocks transferring ISPs. If your email address, Steam library, and Netflix account are tied to your ISP, changing supplier becomes a major hassle.
Well said. After all that the internet promised, it's disappointing to note that the biggest internet company in 2013 is an ad-broker who wants to own all your books, own all your photos, spy on your family, and listen-in to every conversation. I guess their constant lobbying against private ownership of data must be an example of not being evil.
I didn't call the article nonsense at all. I was trying to point out that The Register relies on an advertising-funded model where the product is "free" to the end user, in the same way that Google provides its services. That's not even a criticism; it's difficult to see what other revenue model would work. However if you do want to debate the issue this article is about, as one of the moderator comments above suggests, then it does seem pertinent to discuss why it is that many other businesses, including your own, and mine, rely on the same model that you are criticising Google for using.
Ah, but Google's model isn't purely based on advertising; large chunks of their model relies on exploiting users' personal data through services like Gmail, YouTube, etc and displaying targeted ads, as well as flogging your interests off to advertisers. The Reg's model is mainly display advertising - we don't go examining our users' privates for cash, like Mountain View does.
Yes, there are similarities in the two models, but, after all, ours also relies on us creating content that brings readers back so we have the metrics to show the advertisers. Unlike Google, who merrily leach off everyone else in the guise of a benevolent parent guiding us to our intended destination.
Google's revenue model is almost entirely based on advertising. The differences between a site like The Register selling display ad space and Google are that Google have more than one property/product where they can gather data and display ads. The breadth of data they acquire from having multiple sites and products enables them (they hope) to target ads more effectively, but it's a qualitative difference; after all, you presumably compile statistics such on page views, number of unique IPs, duration of visit, interaction with the site, geographic location of browser, etc when negotiating with your advertisers.
The suggestion that you create content and Google merely leech is disingenuous; Google create services which many people clearly find as valuable as your content.
People find Google's services valuable, yes, but those services amount to a set of shop windows which the end-user fills themselves, be it with emails, videos, popular search results, or whatever. I say Google are leaches because all they do is build a framework and let users do the hard work of content creation - and it's the content that brings more users in. Oversimplified? Hugely, of course, but the basic point stays the same.
We do all the hard work of creating _and_ packaging our content, unlike Google. Yes, the sales team gather data, but we don't rely on other people doing the hard work for us.
As far as I know, Reg does not rummage through my data (like Gmail), shoplift authors' property (like Google books), data-mine my activities (Google search), re-identify my logins (Youtube), or follow me round the internet like a footpad, while running a world class tax avoidance operation and telling everyone else not to be evil.
Reg generates clicks through valuable content. Google is contentless.
Google is content poor, but feature/service rich. News sites in general are content rich (some more than others), but feature/service poor. Where is it ordained that content is more valuable than services? I suggest that most people would value Google Maps (say) higher than the Daily Telegraph, for example.
Certainly the aggregated data that Google hold is a bit spooky, but that's not the point of the article.
El Reg is dipping into tenuous territory (which, admittedly, it can't legitimately avoid) with these articles examining what we all give away as the creators of 'Big Data'. In the case of The Register, which I have faithfully followed for about 11 years, we aren't just the product, we are also the entertainment. We gather together and amuse each other, with a huge number of us just reading enough of the article to be able to enjoy the comment threads. If there ever is an 'awakening' among the previously-grateful adherents of Facebook, Twitter etc, that awakening will inevitably include all those sites, such as this one, the value of which is primarily provided for nothing by its readers. Or, should I say, 'contributors'..?
This isn't a pop at The Reg - I love this site (though I'd be glad of the option to subscribe to it at a moderate price and turn all ads off). I just feel that the day is coming when the best of us men 'on the Clapham Omnibus' might realise that we are giving away something marketable for free, and have been doing so for a very long time. And no, I wouldn't count myself among the best, but you guys know who you are.
Our viewing stats, number of comments per thread, number (ironically) of Facebook and other Social Media 'Likes', 'Retweets' etc, are all inevitably trotted out to advertisers and potential advertisers to maintain or raise the price of MPU and leaderboard campaigns. Without us, there is no 'conversation' (though I vomit at another ordinary English word being appropriated and poisoned by marketing folks). And without that conversation, there is no money - and no site.
I wonder how long the situation will remain this unilateral?
The old lady and banker pay the same for the internet.... If they are on the same package! Hence data caps on cheaper packages.
But wait people can watch free to air tv channels and those cost the same to everyone! Outrageous!
If you do not pay for the product then you are the product. If you use gmail do not bitch about their data harvesting. If you choose not to use gmail then there are many paid (and free) alternatives. Just because they can not compete in terms of volume does not mean google is in the wrong for offering it for free (Yahoo were offering free mail long before google).
Middlemen have existed for as long as commerce. Does the author buy all his fruit and veg direct from the farm? does the farm buy (or make) all its fertaliser locally? somewhere there is always a middleman and the value add can be nothing to massive.
Bashing El Reg? Why do you think so? Bashing the idea, yes, but is it the same thing?
Now, why do I think the idea is bad - as I explained in another post, if you *want* to kill independent internet entrepreneurship, then this is exactly what you need to do. Get ISPs to decide what you can and cannot get through them.
They will sell you packages *they want*. As a content-making website to get into the package you will have to promise them promotional spending programs, share of the margin (40%-50%), exclusivities. In return you will get a chunk of bandwidth which can be withdrawn at their discretion without much recourse at any moment.
No independent, small upstart etc will be able to afford any of that, except a small lucky few, who know the right people or have experience of how things work by being insiders in the industry. Only large guys will thrive - the Nestles and Coca-Colas of the Internet.
If you have any doubts - this is exactly how the supermarket "multiples" work in the brick-and-mortar world. You are welcome to check it for yourself if you don't believe me.
So, next time you wonder, on your way to Tesco, what's happened to that grocery corner shop that used to be on the corner - that is what's happened.
I know it isn't my comment but I do have an opinion on the bundling issue. I relate my ISP to any basic utility provider (electric, water, sewer, etc...) and they don't limit what I can do with those things. Other laws might limit me but if I want to run a 1Tw LASER in my basement the electric company isn't going to prevent me from doing so, likewise with the water company with filling up my swimming pool everyday & running my lawn sprinklers non stop. Not that I do those things but I could if I chose to.
An ISP bundling things is a fast track to tiered hell where in order to make the Internet function as I want I have to subscribe to whatever package(s) meet my requirements at a direct cost to me. Not to mention screwy issues with vendor contracts: What if Comcast decided not to partner with Google for Gmail and chose Yahoo! instead. I'd have to pay extra to keep my previous address and we all know partnerships are fluid.
No. I like my Internet piped straight into my house with the power to use it as I see fit.
Where do you get that I was bashing El-Reg??? I'm bashing the article and I'm saying it's the worst idea I've ever read here... ALL about it's content... nothing about it's container. Had I seen it on my local paper, or other tech outlet, or even in a comment... my reaction would have been the same.
As for why? I think it's pretty freakin'obvious!
The article argues that Google and others are taking consumers for a ride by providing free services thus keeping people (like ISP's) from being to monetize the services by charging for them.
Well... actually, Google gives the services and pass the bill to advertisers instead of consumers. And that's the way it SHOULD be!
Treating the Internet like cable TV would result in the same thing we get from cable TV. You get "basic", which is small, flat and uninteresting. Then you have to pay extra for "good" stuff. And then well, you really want only channel X... darn it only comes "packaged" with Y, Z and you have to pay extra extra for that.
Same as... you want access to El-Reg.. well it comes packaged with ZDNet, and SemiAccurate, and blogger... that'll all be extra.
I remember a time when specialty cable channels, that the consumer had to pay extra for, had no commercials because they were EXTRA and made money from subscription. Where did THAT go??
Actually, giving ISP control of where you're allowed to go online would be the BEST way of keeping the little companies OUT and killing innovation. Plus... it would force the ISP's to check and keep very careful track of where people go on the net... you think Google's privacy policies are a problem??? Yeah... sure... I trust big telcos with my personal stuff... sure...
There is just so much flawed with the arguments presented in this article. The supposition that a significant number of users are prepared to pay for service just doesn't hold water. The music / movie / games industry have for years tried to claim that they are losing billions with every pirated download equivalent to a lost sale. This has never been shown to be true, at best you have a ten to one ratio of people willing to pay and that is for being persuaded to not engage in an illegal activity.
With free email / maps and so on people are even less likely to be persuaded to pay for a service. The main thrust of the argument that Google / Facebook providing it for free robs other providers / "the economy" also doesn't gain any real traction. Email and maps services have always been available for free. Before hotmail started the whole web email service for free, my ISP provider used to give me "free" email in order to persuade me to remain as part of their service. Similarly MultiMap / StreetMap have long provided free mapping services before Google based on an advert supported model. The only way to stop the "free" model from occurring would be to outlaw it and effectively turn the internet into many walled gardens.
The article just smacks of corporation bashing when really it's the leading governments in the world who can't sort out their own tax regimes.
Pretending that Google is blocking the development of an internet economy is quite laughable. Try to remember the good old days, when the providers held control over what you could access and how you could do it. Remember the mobile phone companies trying to push their service? Things were quite unusable AND expensive. It was only the unexpected rise of the free internet and the fact that Yahoo, Google, and company wrestled control from the providers that gave rise to the free internet as we know it. I can quite imagine the kind of service some non-google company would like to sell to me, and it's not 25 ¢/year ad-free email. It's the exclusive (as in use it or bugger off) access to the great online ALDI store, with an exclusively low 15% extra margin for the convenience of using said exclusive service. It's Google who freed us from that kind of exclusivity and gave us easy access to the full internet (including Amazon, Alibaba, and millions of other contributors of wares and information).
How again does Google keep the competition at bay? They don't have exclusive access to anything, I can even use my Google/Android phone without stumbling over garden walls. They simply offer an unrivaled quality of service for information retrieval. The internet is open for the competition, so don't whine about their dominance, but invent better ways if you believe they are there.
Currently we have cheap internet service for all. This might not be fair for the small-time users (although they might simply use a cheap low-bandwidth service), but if you start to fragment the market with a lot of 'specialized services (you great 'bundles'), you'll just end up with a great overhead for everybody and expensive + lousy service for all. Keep the pond open and watch out for the sharks!
"Google and Facebook - so-called "over the top" players who piggyback the world's expensive network infrastructures - give away their services for free. They'd prefer us to believe it's through benevolence. They like to promote the idea of a sharing hippy utopia, and slack-jawed academics applaud this"
I suppose you would like to see all the Linux/Apache servers shut down for using all the bandwidth.
While you're at it, all FOSS should be made illegal.
"Google and Facebook - so-called "over the top" players who piggyback the world's expensive network infrastructures - give away their services for free. They'd prefer us to believe it's through benevolence. They like to promote the idea of a sharing hippy utopia, and slack-jawed academics applaud this. But I would argue that another motivation is that said free services are a powerful barrier to competition, and ultimately, the emergence of a real digital economy."
"Imagine two Gmails. One remains free and advertising-supported, the other is available to you for 25p a year via your ISP. The designers of the latter system, let's call it "RealMoneyMail", wouldn't need to show advertisements, obviously. They would need to invest in carrying your emails efficiently rather than in a vast behaviour-processing server farm. They wouldn't need to pry. 25p isn't a lot per person, but spread over millions of users, it would be enough to run a business. And the "RealMoneyMail" team would be acutely aware that if they did a lousy job, consumers would walk: the market would shun their product. So their incentive is to make it a great one."
HHHHhhaaaahhhhhhaaaaaahhhhhaaaaaaa..... Oh Boy! That was a REAL good 'un. Now, I have to go pay my cable TV bill, BRB.
What a load of bollocks!
Imagine where you have two Gmails. One sucks, is "free" and is actually called Hotmail. Another is alright (at best) but costs money and is called Outlook. A third is called Gmail, pretty good, and is "free". A fourth is alright, free, and is called Thunderbird. A fifth [etc....] The one that the consumers considers the best value is the one that the consumer will use. That's called competition.
I agree it's sad that since everything has moved to ad-based cloud services, there's no competition in the market. Or to be more clear, I would, if it weren't a complete delusional fantasy spawned by a FREE AD-SUPPORTED media site.
The entire concept that content providers are forcing consumers to have unlimited access to the internet is completely ludicrous. Limited access plans are common, and becoming the norm with mobile access. I am unaware of how it's content providers and not service providers who are forcing unlimited access onto consumers, nor am I really clear on how it hurts. The cost for internet is almost completely overhead, and is therefore distributed equally. The amount or duration of usage is pretty much equal. Person A uses the internet for porn for an half-hour, and downloads 100MB, compared to Person B who uses the internet for 3 hours playing a game, and downloads 500MB, are actually equal. They both used the internet once. Nonetheless, even though I don't understand how the author thinks that the days of pay-as-you-go service plans were better, they are certainly welcome to use a pay-as-you-go service, since Google, et. al., have been unsuccessful in completely destroying the internet access industry.
Although I'm completely confused as to the point, I have a suspicion it's that there's no tax on free products, despite the fact that someone is paying for them, and that Google makes loads and loads of money. If that's the point, then the article could have skipped all the bull, fantasy, misinformation and outright lies, and just said, "We should tax Google and other corporations."
Wait. You're suggesting carving, ehem, 'bundling' my internet content like my FORMER cable company bundled channel packages? The one where I want 7 channels but HAVE TO BUY 3-FREAKING-HUNDRED CHANNELS?!?!?!?
That's the whole reason for the cut the cord movement. I PROUDLY and with great fiscal responsibility no longer subscribe - indenture myself - to CTV.
ARE YOU HIGH?!?!?!?!?
I don't understand the point of this article. We all have to use Google services because they're free and nobody can compete with them?
Bollocks. Google is in all sorts of markets with prior (and current) competition, and said competition was already free. Hotmail was free. Mapquest was free. Facebook is free. Amazon cloud services are, if not free, at least cheap. Google made dramatically better products than the former too and that's why they dominate those markets now. They don't dominate the latter two markets after years of trying.
Seems like the conclusion to draw here is that Google isn't getting a free ride. These services are all competing on quality, there's no indication that people won't change from one to the other, and nobody is being forced to use Google services.
As a tech-savvy person I choose to use GMail because it's vastly better than the many alternatives that are available, at least for my needs. Huge storage quota, good uptime, integrates well with all my IMAP-compatible devices, fair web interface if I need to use that in a pinch, etc. I don't see why everybody is in a privacy tizzy. Maybe if somebody at Google was reading all my email. If they want some idiot algorithm mining my email for advertising keywords then how is that a privacy issue exactly?
This post has been deleted by its author
"As a tech-savvy person ... I don't see why everybody is in a privacy tizzy. Maybe if somebody at Google was reading all my email ... then how is that a privacy issue exactly?
Hilarious, keep it up."
Nice, you're like a copy and paste ninja, managed to change the meaning of that sentence to the opposite.
What utter nonsense. "a banker in a Docklands apartment" (boo, hiss) who downloads 24/7 pays WAY more than the average grannie. She'd be on one of those Dodo plans whereas Richy Rich would have his own microwave link if he wanted it. None of that by the way has anything to do with Google. Foxtel offers a service that is slightly different to Telstra's which is slightly different to Google's. So? Each party lobbies government to legislate against the other to create a natural monopoly. Lawfare has always been part of doing business. As long as new companies are not prevented from offering new services, the market is free. As long as customers are not prevented from taking up those services, the market is free. In both cases, the market is not exactly free, and it's the government's fault, not Google's.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
