News: 1599031931

All taxes are paid from the wallet of the customer.

When you have a monopoly and thus totally inelastic demand. In a free market economy its added to the supply curve as a cost.

He can afford it!

This is proof, if any more is needed, that Google is a monopolist and needs to be broken up. Being able to hike your fees because your company's tax is increased (rather than an indutsry-wide levy) is good evidence that you are a monopolist.

It certainly is. We're still outsourcing competition regulation to the EU until December - so it'll be interesting to see what the new competition regime makes of this. It's pretty blatant.

I'm still convinced it's Google's arrogance that will bring them down. They've had so many opportunities to deal reasonably with politicians - and every time they double down on trying to achieve exactly the opposite result of what regulators are going for - and hope their massive lobbying and academic astroturfing budget will get them out of trouble. When that day comes, I'll be over here, pointing and laughing.

Will it? You think we'll "Level Up™" enough to be able to take on Google?

Someone will. Remember 20 years ago, it was Microsoft that looked untouchable? Now they're not even mentioned in these discussions.

The wheel of time turns quickly for companies.

The EU got us the option to chose which browser we wanted to use (but the price of Internet Explorer was still included in the price of Windows) and the option to chose which media player we wanted to use (but the price of Microsoft's media player was still included in the price of Windows). Getting that far took about a decade, with Microsoft eventually paying ever increasing fines until the fines exceeded the benefits of breaking the law - because Netscape had already starved to death.

The world is a better place when competition laws are enforced - even five years too late but the real change that will one day push Google into second or third place will be unrelated to the activities of politicians just like it was when Microsoft failed to extend their desktop operating system near monopoly into mobile phones.

I was paying for Windows media player!!!! That's like paying for toe fungus.

the problem is, the big bullies are already very, very sensitive to trends and fads, and as they sit on a stinking pile of cash, they can, and DO scoop any and every little and not so little company that comes up with a bright idea.

UK monopolies law was reasonably tough before we handed it over to the EU - and I don't think any of the tough stuff the EU have done has been controversial here. So I'd expect us to have similar competition law. Particularly as lobbying is less effective in this country than it is in the US - because our national elections don't cost $5bn a time - the 2 main parties spend roughly £15-30m each.

In fact I suspect the EU are going to move the other way, and significantly ease their monopolies enforcement - as there's much more of a feeling that they want to protect "european champions". Both the French and Germany government were dead pissed off that the Commission blocked the Alstom - Siemens merger a couple of years ago on competition grounds. They want big companies to compete with China and the US. Although fining Google is becoming something of a spectator sport for the Commission now, and that's politically popular - and gives good cover for our lot to join in and get some free cash. Google management's arrogance and stupidity make them an easy (and tempting) target - and their involvement in election manipulation and fake news makes them even more juicy and deserving of a bit of government kicking. They've also got few friends in the media.

They've also got few friends in the media.

It'd be quite easy for Google to trash a media outlet if it so chose; just lower it in search results, Google News etc. Look at the [1]Facebook battle in Australia at the moment for an ongoing Big Tech Vs media battle..

[1] https://www.theregister.com/2020/09/01/facebook_australian_news/

Being able to hike your fees because your company's tax is increased (rather than an indutsry-wide levy) is good evidence that you are a monopolist

What are you talking about? Tax goes up, costs go up. Occam's Razor isn't "The simplest explanation is usually the correct one, unless you have a random ideology you want some evidence for."

Besides, isn't this precisely what we wanted? If prices go up, online advertising loses some of its advantage over other media. Maybe there will be less of it. How is that anything but a win?

What are you talking about? Tax goes up, costs go up.

Robert Grant,

Economic theory says that companies don't set either wages or prices. They charge / pay what the market will bear - and if their costs go up they just have to put up with it, as they're already charging all the money they can get away with. Of course, if everyone's costs go up, then everyone will put their prices up - and then the market price will rise.

However monopolies do set the market price, as there's no alternative. Which is why you pay Apple and Google 30% for going in the app stores, with no negotiation on rates - even for the big boys. In economics you'd call online advertising an oligopoly, because Google and Facebook are the two big boys who control well over 50% of the market between them. In law they're probably both monopolists - defined as having over 30% of a market and market control (i.e. the ability to be able to set monopoly prices).

It's basically a definition of a monopoly that you get to set the market price, as opposed to the customers doing it. And hence, make monopoly profits. Obviously none of this is really as black-and-white as I put it down here, but that's the first bit of any monopoly investigation: Do you have one? Do you set market prices?

For interest a monopsony is when someone controls the market for buying stuff, rather than selling it. So when Apple, Google and a bunch of other Silicon valley companies got together to not poach staff off each other and artificially lower wages, that was a monopsony - although I don't remember what the word was for a group of companies acting as one (in the same relationship as monopoly and oligopoly. Cartel perhaps? To be fair, I last studied economics in the mid-90s, so we're talking the last millennium!

However monopolies do set the market price, as there's no alternative.

In the case of Amazon, maybe; but not for Google. Amazon sets prices for whatever it sells, but ads sold by Google don't have a fixed price list; they're auctioned off, and so they are sold at what the customers are willing to pay. (Google also sells cloud services at fixed prices, but it's not much compared to Ads). If every company buying ads in UK keeps having exactly the same budget, it should change very little to which and how many ads are shown, since they're all competing at comparatively the same price.

Only 2%?

Why only 2%?

Anyway, something's fishy. I don't get how the average pay packet for nearly 4,500 staff supporting UK operations can be £234,000.

Allowing Google to pay only 2.73% tax on £1.6Bn revenue.

Source: https://www.accountancydaily.co/google-revenue-hits-ps16bn-pays-only-ps44m-corporation-tax

The article you quote starts with a lie. That's the only way I can describe it, because it's supposed to be an accounting publication and should therefore fucking know! Corporation tax is not levied on revenue it's levied on earnings.

So describing their corp tax bill as any percentage of revenue is utterly meaningless! These people shoudl be aware of something as basic as this - and therefore are being deliberately dishonest in order to stoke outrage. Which, in your case, has succeeded.

Corporation tax is levied on profits (earnings), not revenue (turnover / sales). Their profits are down on last year, hence their corporation tax is down.

To quote the actual relevant figures from your article:

Operating profit was put at £225.8m, down from £245.5m the year before.

So they paid £44.3m corp tax on profits of £225.8 - which is 19.6% .

Now, admittedly, Google almost certainly were guilty of tax evasion back when they sold their advertising in the UK, but processed all the paperwork in Ireland - and claimed that was where they paid their tax. Which is why they moved their sales organisation over there a few years ago, after some sort of telling off from HMRC - I don't remember the details, if they were even public.

But this doesn't appear to be it.

When ever somebody says something like "Company X only paid £Y tax on £Z **revenue**" I immediately switch off and blank the rest of what they say because, as already pointed out, they obviously know fuck-all about how business taxation currently works.

Whether business taxation currently works *well* is another story, of course.

Sure but their net profit margin worldwide is 23%. Are we supposed to believe that in the UK, which accounts for 10% of their worldwide revenues, their profit margin is only 2.7%?

"Allowing Google to pay only 2.73% tax on £1.6Bn revenue."

That's how we get taxed (in good old PAYE-land) - the idealist in me would like corporations to be taxed that way too... but their pockets are deep so we get shafted, and they get their accountants to reduce their "profits" by as much as they can...

A progressive tax on revenue should be levied in an ideal world. But the bottom rate shouldn't start at the first earned.

Without thinking too much about it, a 0.1% rate on revenue over 500 million would be a good starting point, rising to 10% on revenues over 10 billion. That would hit the largest companies the most while leaving small to medium businesses largely unaffected.

A severe restriction on the amount of money that can be transferred to a sister company for "licensing" wouldn't be a bad thing either. (Either that or make that taxable somehow.)

Good luck ever getting any of that passed into law though.

Oh no! Now my £3 plastic crap from Amazon will cost £3.06! Still £5 cheaper than the little place down the road that has to pay things like rent, business rates and sick pay to employees.

The fiver you can afford, do you like having local businesses or have you never needed something more urgently than 24 hour delivery?

The system is capitalist. The people spending money have the power to change the direction the system takes. If they can be arsed.

> And you’ll probably end up paying, too, because advertisers build the cost of ads into the prices they charge for their goods and services. Now that the cost to advertise beer, bread, bacon and any other commodity on Google just rose, brands will surely pass on their extra costs rather than wear the pain on their own bottom line. Just as Google has chosen to do.

Well no, not really. "Brands" don't spend whatever it takes to place n thousand ads on Google. They have an advertising budget measured in dollars(/etc.), which they try to spend wherever seems to get them the best return. But since this affects all customers equally within a region, and AIUI ads are priced by auction, the fee will likely be absorbed into the earlier price, and I can see the advertising effectiveness per currency-unit not changing much in real terms.

People are forgetting, what big tech, especially Google, profits are engineered by design before tax is due on their revenue, "legitimately". The additional 2% tax acknowledges this and is supposed to place a fairer tax on these vastly wealthy companies, instead, ones like mine have the bear the 2% increase in a competitive market which is unfair and sometimes not possible to pass to the customer, an actual kick in the teeth. Ok Google!

What did people expect? It is amazing how it is somehow expected that its ok to dip fingers in someone elses pocket but I am sure there would be a different reaction to having the fingers in your pocket, as this shows. People are happy to try and take from google and amazon but cry when that cost is passed to them.

Robin Hood doesnt work. The rich move their money a different way and pay for protection. Robin Hood cant rob the rich so he is left with the rest to steal from.

Ad budgets will stay the same, they'll just get less ads, and websites that rely on ad income will lose.

the solution: buy more more MOOOORE!!!

"The rich gettin' richer,

the poor get the picture"

https://www.youtube.com/watch?v=9QzH4KOf9Bs

"And you’ll probably end up paying, too, because advertisers build the cost of ads into the prices they charge for their goods and services."

Advertising space is auctioned off to the highest bidder. If Hovis bid £1 for an ad slot, that means they think they will make at least an extra £1 in gross margin from sales generated by that ad. The imposition of this tax is not going to mean they will earn an extra 2p from the ad campaign, so they will set their bid at 98p.

"And you’ll probably end up paying, too, because advertisers build the cost of ads into the prices they charge for their goods and services."

Rubbish. The prices they charge are based on market analysis to generate the highest revenue, market share and/or profit. Costs are irrelevant unless the company has a monopoly.