Was Trump Right: 'Tax Lady' Effectively Makes Google A New EU Member State

Five billion dollars, wow. At this rate the EU is not going to miss the UK's contribution to its coffers, all it needs to do is carry on fining Google. 

A €4.34bn fine is already above the annual net contribution the EU receives from The Netherlands. However, if you add this to the €2.4bn fine for abusing its dominance in search last year, you're only three billion Euros below the UK's net annual contribution to the EU. Factor in a likely future fine resulting from an investigation in to its possible abuse of the Adwords service, and you never know, we could be close to Google handing over as much to the EU in fines and the UK pays as a net contribution.

The point? $5bn or €4.34bn is a heck of a lot of money, to the point where it's the equivalent of the EU having a new member. 

Perhaps Donald Trump got it right when he referred to Margrethe Vestager, the EU Competition Commissioner, as being the "tax lady" who wasn't too keen on the US tech giants. It is starting to appear that way, at least just a bit, isn't it? Not the part about Vestager hating US companies but more that, in the face of the tech giants appearing to not pay their fair share of tax, the EU has found another way to raid their coffers.

That's not to say that Google is innocent. Clearly, it has done wrong. The clearer case was over search. It was promoting its own businesses at the expense of rivals. It fought the proceedings against it for as long as possible, rather than remedy the issue itself, and so was forced to both change tack and pay a, then, record fine.

The Android case is also clear in that it's self-evident Google insists Android phone makers put its apps on their phones, pre-installed. So, yes, competition is stifled in the same way Microsoft fell foul of antitrust rules for the software that came pre-installed with Windows. However, with Google, you can at least say the consumer gets something for this. Android is offered for free, the catch is you're unlikely to download another search, browser or maps app, although you can, if the mood takes you. 

Nevertheless, even if one case seems to hurt consumers more than the other, Google is clearly guilty of both charges. One has to wonder if the company is so arrogant it thought the charges could be dodged, that it could reverse the history of the Microsoft antitrust case and get away with tying in software to an operating system.

Anyone this side of the Atlantic can assure American colleagues there is massive anger at the US tech giants, and this is the public manifestation of it. Mild-mannered citizens are angered by a lack of transparency on tax and digital marketers are split between admiring the company and loathing the fact they dominate a market, sucking out the majority of UK ad dollars to be taxed somewhere else. Legal yes, but questions arise where their moral compasses are pointing.

There are two clear lessons, other than perhaps Trump referring to the "tax lady" was probably a little more on the money than EU officials would like to admit. First, if you don't pay tax and dominate a market, expect to have some of those profits taken off you in another form. If you are acting in such an anticompetitive way, and refuse to change, the cases brought against you are never going to be about the verdict but rather the size of the fine.

It is, of course, worth mentioning Google, has announced its intention to appeal against today's record fine, just as it is already appealing against last year's, then, record search fine. It also rejects the Adwords abuse charges.

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