Internet giants take flak

08 December 2014 - 09:42 By © The Sunday Telegraph
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File photo.
File photo.
Image: Toria/shutterstock.com

Google knows where you live but it won't tell you where it stores that information. It won't even tell the highest court in Europe, where it is gathering data on hundreds of millions of citizens.

This has put the EU and the US on the brink of a new kind of trade war, in which flows of data are just as important as flows of capital.

The British government's "Google tax", announced last week, is the latest example of policies that target the powerhouses of Silicon Valley.

Multinationals using artificial structures, such as "brass plate" operations in low-tax jurisdictions, face a levy of 25% on the profits assessed by British authorities to have been generated from the UK.

With normal corporation tax at 21%, Britain hopes Google, Amazon and others will abandon such wheezes and report profits, raising £1-billion ($1.56-billion) for the UK in the next five years.

The tax has been welcomed by those trying to build internet companies, who say technology multinationals with vast offshore cash reserves for investment have an unfair advantage.

"If you're an investor are you going to bet against Google? Are you going to bet against Facebook? No," said British investment adviser Paul Cooper.

Google serves about 90% of all searches in the EU.

The European Commission, Europe's antitrust regulator, has been investigating how Google uses and allegedly abuses its market position.

Telecoms executives have accused Google of behaving "like a child" in its dealings with Europe. The antipathy extends to other US internet companies, including Amazon, Facebook and Uber.

"They push and stretch the law ... they also 'hack' it, which is basically ignoring it," said one telecoms executive. "The politicians will say, 'You know what, I'm going to teach you a lesson'."

Last month, the European parliament even approved a motion that suggested that Google might be formally broken up - or "unbundled" - to separate the dominant search engine from the company's array of other services, including YouTube, Gmail and the Android mobile operating system.

"Data is the new oil" is a popular trope among evangelical internet executives.

To its enemies, in that case, Google increasingly looks like Standard Oil, John D Rockefeller's omnipotent monopoly. In the end, that was broken up.

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