• Innovation

    What is going on with Google, EU and Italy?

    With its Statement of Objections against Google on Android, the European Commission is rightly exercising its role as guardian of fair competition. Now it's time for Member states to put in place a coordinated effort at EU level on the taxation of big tec [read more]
    byMassimiliano Salini | 17/May/20163 min read
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    With its Statement of Objections against Google on Android, the European Commission is rightly exercising its role as guardian of fair competition. Now it’s time for Member states to put in place a coordinated effort at EU level on the taxation of big tech companies.

     

    “The European Union has the duty to ensure freedom of competition”, only by doing this we can “ensure the innovation that is necessary to the growth of our economy”.

    These words from EU Commissioner for Competition Margrethe Vestager lay out a basic principle that the Union has a responsibility to protect.

    Fair competition and consumer protection translate into lower prices and greater choice for all EU citizens. In addition, they provide the basis for the creation of a single digital market in which European entrepreneurship can prosper.

    To give just two examples: the cost of phone calls in Europe has been reduced considerably compared to ten years ago; and families and business are now able to freely choose their electricity and gas supplier.

    On April 20, the EU published a Statement of Objections against Google in which it claimed that its “Internet search”, mobile operating system (Android) and app store management practices were contrary to European competition law.

    Commissioner Vestager accused the US giant of promoting its products at the expense of its competitors, forcing smartphone producers willing to install the Android operating system to also install Google’s apps.

    This despite the US company’s claim that “Android is an open-source operating system based on open innovation”.

    In the past, the Union has been a strong guardian of fair competition, as in the two cases involving Microsoft (condemned for the lack of free choice related to its web browser and abuse of dominant position) and Intel (sanctioned in 2014 due to its market monopoly in a model of popular processors).

    Given Google’s dominant position, it will be necessary to identify structural remedies, as happened in the past with telecom companies, Microsoft, and other players in similar conditions. We enjoy the results of these remedies every day, with these markets now fully competitive.

    The EU must ensure pluralism in the market so that it can establish a fair level of competition. Only if the rules are the same for everyone will it be possible to give birth to large technology companies.

    The new technologies field is particularly complex and delicate: its huge opportunities must be accompanied by major investments in research and technology.

    Google covers approximately 90% of the smartphone operating system’s market thanks to Android.

    Consequently, it can also dominate the app and online search markets (the two are crucial for advertising sales) as well as the market for videos thanks to Youtube.

    This massive presence means the Mountain View-based company holds the largest share of the online advertising market.

    Thinking about the incredible numbers that all this produces, we must also address the issue of the relation between large hi-tech companies and European tax agencies.

    We are awaiting a European tax regulation: in the meantime, individual States are moving in a random order.

    Google will pay the British treasury a £130 million bill in back taxes, a value that many analysts consider to be too low bearing in mind the amount owed since 2005. France has chosen a different path, seeking as much as €1.6 billion from Google in unpaid taxes.

    What about Italy? Amidst disputes between tax authorities and the judiciary, as well as agreements rejected by the company, the government’s position remains unclear.

     

    Picture credits: David Macchi
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