The Six Five team discusses EU Strikes Down On Google & Apple
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Transcript:
Patrick Moorhead: Europe basically said, “Nope, Google, you’re going to pay.” And on a Irish tax issue, Apple was forced to pay as well. Dan, is this just the EU trying to regulate itself and be the most innovative regulatory beast out there? Or are these just big companies acting poorly?
Daniel Newman: Yeah, I love this stuff. Hey listen, so this was an interesting week just because Apple had its event. Apple had a lot, it was getting a lot of attention. And then Apple got strapped with a 13 or so billion dollars tax bill. Company has been fighting on the onus that it had paid taxes in the US so it shouldn’t have to pay taxes. And this came back to me and I did some second tier TV about this, but I was talking about how, one is, you really can’t avoid paying taxes anywhere. So tax efficiency is the strategy of every company. They take advantage of every loophole. And companies like Apple have more lawyers and accountants than ever necessary to figure out ways to pay less tax in different regions. Like Ireland’s often been a market that has been particularly ripe for avoiding or delaying or deferring taxes.
There was a period where under Donald Trump you were able to bring repatriate dollars to the US at a lower penalty or lower cost, which a lot of companies took advantage of. And now what’s happening is, Europe is coming home to roost on the fact that maybe you did or didn’t pay a fair share of tax over in Europe. Pat, I’m always one of those people that if the law is written a certain way, I admire companies for finding a way to be as efficient as possible. But if their taxes are due, the taxes are due. I’m sure they’re going to try to find a way to kick this can down the road for another 10 years before they’ll actually have to pay it. Because the fundamental belief of these companies is, they’ll do more with a dollar than the government will, which I don’t think I could disagree with in any circumstance.
They also could then use this money to do some absorbent buyback. If anyone’s ever checked the chart of Apple buybacks, it’s remarkable. So that’s kind of the situation on Apple. I mean EU, I say this every time, Pat that we end up in talking on this topic, their innovation is stagnant, the economy is not growing. Their best companies tend to leave and that’s because it’s just not a great place to build a company. Its entire focus is on, they’ve got this privacy focus, but this privacy focus is more about data control. The data control practice is all about giving strong abilities for these companies to find the DMA to be able to charge tax and find these companies and speed bumps and tolls for existing. Companies like Spotify and others that have been successful in Europe, they leave Europe, they want to redome a cell because it’s not a great place to build companies, and that’s unfortunate. But this isn’t like unique. I mean Google also got hit with a $2.5 billion fine per search. They’ve had over $8 billion in fines over the last five years or so. One was related to search, one was related to shopping. And the entire thing with Google, similarly to the Apple thing is just they’re looking at fundraising activities. So there’s very little GDP growth, there’s very little startup few unicorns. They don’t seem to exist there. So the way that Vestager historically and EU competition and leadership in this particular area make money is they find companies.
Does that mean that I genuinely believe these companies do no wrong? Absolutely not. I’m not suggesting by any means that these companies do not take advantage of their technology to give themselves preference or misused data. I’m just saying that there is a conflicted policy set in Europe that continues to make doing business there not particularly lucrative for big tech companies and startups. You’re seeing features not being rolled out in that market frequently by companies. And eventually if it gets too strict, they may just not roll features or come to these markets at all. So Pat, it’s been a revolving door. It’s been Google, it’s been Microsoft, it’s been Qualcomm, it’s been Intel, it’s been Apple, it’s been Amazon. It is a merry-go-round of 10 figure plus fines in Europe. What I’m not seeing though right now where I’m at least not understanding right now is what is their plan to actually stimulate and create enthusiasm and excitement for tech to participate, to grow, to invest both at the startup end and then of course for big tech. It’s getting kind of murky over there.
Patrick Moorhead: Yeah, it’s hard for me to peanut butter any of this stuff going on there because some of these I totally get. I mean statistically speaking, Google has a monopoly in the digital advertising market. And not only do they have the double-click as probably the biggest weapon, and by the way, they bought double-click when I was at Alta Vista, the best acquisition that was made here, and this is before most advertising was digital. So technically they do have a monopoly. And I don’t even think it’s the fines that make any difference at all. I mean Google has wrapped up $8.25 billion in fines, but that doesn’t mean anything. Sorry, 8.25 billion euros over the last decade. It means nothing to these companies.
Daniel Newman: Speed bump, speed bump.
Patrick Moorhead: Unless they have to charge. I think with Apple they have $48 billion left of cash that they can’t buy any big companies. They can’t over invest in markets here. So all they can do is share buybacks. So they’re in this weird conundrum, but only if you make them change something, is it going to hurt? So for instance, Apple having to allow third-party app ecosystems into their store, that is going to be difficult for Apple. And we’ve seen Apple try to not do what it’s been asked do multiple, multiple times. And I’m sorry, I am not buying the security thing. I think Apple is acting quite frankly, like a little baby who was told it can’t play with this toy and it’s going to sit in a corner, it’s going to scream, it’s going to gnaw and it’s going to gnash. But you can sideload an Android, you have adults, you can do that. I think the Android not being secure is a non-issue at this point. I keep waiting for the cataclysmic event that Apple keeps talking about with Android and who knows, maybe in 10 years it might, but I just think it’s an excuse. And when it comes to a lot of these big companies, they just want to be the biggest monopolist out there.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
