Europe v Google: Nothing to stand on

http://www.economist.com/news/business-and-finance/21648606-google

by msabalau • 11 years ago

68 58 11 years ago

economist.com

higherpurpose• 11 years ago

Probably because the EU was "unnaturally" pushed into doing this without fully understanding what they're doing:

http://www.nytimes.com/2015/04/16/technology/microsoft-once-...

WildUtah• 11 years ago

Microsoft is just the evil empire that keeps on giving. The Windows monopoly is weaker than ever, but the scam patents and the PR machine to drive out competition are still moving politics to keep Microsoft's fading monopolies powerful enough to slow progress in the industry.

cromwellian• 11 years ago

Regulatory Capture.

tajen• 11 years ago

I've worked outside EU in an awesome startup. The VP of engineering went for a worldwide tour of hype IT capacities, to learn how the like of Twitter, Facebook, Volkswagen or Barcklays perform top-of-the-class software development nowadays. He made a blogpost of about 700 lines about worldwide companies. Europe was at the bottom, in 5 lines: "Europe: Nothing interesting. These guys haven't even moved to Agile after 13 years". I felt insulted but I have to reckon he summarized it well.

I'm a sole trader with a "product" strat-up in France. I spend about 10% of my time on paperwork. I've have a police inspection yesterday "because I'm flatsharing". We have mandatory taxes and charges of about 70% [1]. There's no way we can become big.

[1] Income tax: 20%, Mandatory unemployment/state/health benefits 46%, VAT 20%, land tax $300 for using my own flat for professional purpose, corporate tax, mandatory non-computerized accountant $2800, bank $300, and unclear legislation compared to, say, UK, requiring hours and hours of reading and tax dodging.

ptaipale5• 11 years ago

You have to pay tax if you run a company at home? Wow.

That's not all of Europe, though, this must be a French peculiarity.

krzyk• 11 years ago

Not only France, same in Poland.

skrebbel7• 11 years ago

Woa Americans don't pay income tax if they generate the income themselves? Awesome. Completely fair, too.

EDIT: I completely misunderstood, my bad. Not deleting this comment because it's already gotten a reply.

carrotleads• 11 years ago

Not to mention you will pay company tax on profits made while the big guys route their profits through Ireland & singapore and pay minimal tax.

skrebbel7• 11 years ago

Sooo in the US he went to Twitter and Facebook, and in Europe he went to Volkswagen and Barclays, and then he ascribes ancient software dev techniques to geography?

As equally (un)valuable anecdata, I'll quote Jeff Sutherland, one of the two guys who made up Scrum, who told me that in his opinion, Scandinavian companies are way ahead of the agile curve[0] than American companies. But hey, maybe he went to Goldman Sachs and Spotify to draw that conclusion, who knows.

[0] not that "agile" is somehow better than "not agile"[1], but you catch my drift

[1] http://programming-motherfucker.com/

pja• 11 years ago

Yeah, lets compare a pair of tech companies which have been around for less than a decade with a car manufacturer and a bank, both of which have software in use today that was created decades ago and operate in heavily regulated environments.

Apple, meet Orange: Surprise! They taste different.

raverbashing• 11 years ago

"Europe: Nothing interesting. These guys haven't even moved to Agile after 13 years"

That's not my perception

Check job openings in London, Dublin, Berlin and see what they're using

EdwardDiego3• 11 years ago

Yep, Berlin is definitely heavy with Agile start-ups.

jokoon• 11 years ago

I share your pain, but in many european countries, politics are scrambling to reduce their deficit, so it's not a thriving age for small players. Economically, it's more a surviving age.

You would have better success of doing things on your own, making a product, having a minimal business model. I'm really wondering if there are angel investors in France, but so far I would consider avoiding the company model entirely, like john carmack described it.

It would certainly forbid you from doing certain things, but in this day and age I don't think it's possible to compete with the big boy's club.

conradfr• 11 years ago

So Agile is the only top-of-the-class way to do software development now ?

known• 11 years ago

I'd blame http://en.wikipedia.org/wiki/Flexicurity

threeseed• 11 years ago

That's very odd.

Spotify is one of the world leaders in techniques for scaling Agile across large number of feature teams.

meowface• 11 years ago

Google (whose executive chairman, Eric Schmidt, sits on the board of The Economist’s parent company) told staff in an internal memo that it has a “very strong case” to make against all the allegations.

I'm glad to see disclosures like these.

s3r3nity• 11 years ago

Is no one going to address the validitiy of their arguments against Google? If you've followed HN / Reddit the past few days, you would've thought that the EU is some crazy entity of whack-jobs. But I can't find much in the way of analysis of why this might seem actually be a worthy debate.

magicalist2• 11 years ago

The problem is that the Statement of Objections is private and will apparently remain that way for some time (this article says "many months"), so no one really knows what the arguments are (except the European Commission, Google, and presumably folks like "Fair Search").

skrebbel7• 11 years ago

Seriously? The whole story is about search and ads, and thus the Economist concludes with:

But rather than trying to rein in American firms, European politicians should focus on fixing what is holding back the old world’s most promising platforms: the lack of a common digital market. Today only 15% of consumers shop online across borders within the EU.

So to fix a monopolist in search abusing its position, the EU needs to make it easier for me to buy shoes from Poland with simpler VAT laws. How are those related at all? There's probably plenty of reasons why no European PhD dropouts started a successful search company, but cross border e-commerce isn't one of them.

blfr4• 11 years ago

Lacklustre cross border commerce is among the reasons why successful companies in one European country have trouble scaling up and competing with American giants who by default start in a market with over 300M people.

Google's internal response[1] covers it inadvertently. They show stats for various European markets with competition in the shopping category, mostly with other American companies.

[1] https://news.ycombinator.com/item?id=9377951

skrebbel7• 11 years ago

Lacklustre cross border commerce is among the reasons why successful companies in one European country have trouble scaling up and competing with American giants who by default start in a market with over 300M people.

Yes, but search is very low on the list of industries where that matters.

Plenty European internet companies have trouble getting outside their founding country, sure, but the trouble is language, culture, lack of a unified media landscape, etc, not VAT rules. Anybody who tells you different is just trying to find a scapegoat for their inability to execute cross-culture.

This indeed makes Europe a more difficult starting point, but good luck fixing that with politics.

makeitsuckless• 11 years ago

Yeah, because that's what Google, Twitter, Facebook and all do "cross border commerce"...

Not to mention the fact that before the digital age, when all international commerce actually involve moving physical goods across physical borders, Europe had no problem scaling up to multinational corporations.

rbehrends2• 11 years ago

Lacklustre cross border commerce is among the reasons why successful companies in one European country have trouble scaling up and competing with American giants who by default start in a market with over 300M people.

While it would be nice to get the VAT problems sorted out, this is second to the problem of there being a couple dozen different languages being used in the EU. People shop domestically because they can use websites in their native language and when they have problems, can talk to customer service representatives in a language they understand.

It is really, really hard to get your service localized in couple dozen different languages (let alone provide actual customer service in all of them).

Even Amazon handles only a part of Europe, and if Amazon can't do that, what companies can? There are a few, but not all that many, and for many it isn't worth it, because your economies of scale quickly disappear when you have to build and maintain a separate presence in up to 28 different countries that mostly speak different languages. (That includes American companies, too, by the way, many of which simply choose to ignore Estonia or even Sweden and Portugal.)

magicalist2• 11 years ago

It's kind of the basis of the article. The European Commission is focusing on shopping as the core of the case right now, so that's what the article is about.

It's arguing that if you want to improve competitiveness of European shopping sites, there's much that could be done to make sure they aren't hobbled in the first place.

mtrimpe• 11 years ago

Indeed; but that's because the premise of the article seems to be that the EU is doing this out of jealousy and spite. As much as US companies may despise it but outside of their own borders they simply need to adhere to different rules though.

In the US a belligerent defiance coupled with some strong lobbying goes a long way but, like you're seeing with Uber now, that approach doesn't work as well across the pond. Likewise in this case is just about challenging Google's use of its dominance to compete unfairly in other markets (which is illegal.)

That it happens to be about pushing domestic shopping sites down the rankings to favor their own results is rather incidental; at it's core this is just a shot across the bow to make it clear that if Google wants ad-money from Europe they must play by Europe's rules.

I hope Google gets that because these are not relationships you want to become adversarial or else someone might just decide to close the little tax loophole that lets Google escape taxation of its EU revenue.

atmosx2• 11 years ago

Blah, the economist doesn't make sense since 2008. I was a 6-year long subscriber but after the Crimean (Russian vs US) crisis was analyzed without even a hint of objectivity, I start noticing that the quality started deteriorating further and further... Until you see articles like this one or others regarding the EU crisis.

The economist is a conservative, strongly pro-war (seriously, it supported fearsomely every major US/NATO war, last I remember was it's views on the need for USA to openly attack Syria. Disgraceful articles...), pseudo-liberal magazine.

You see good articles every now and then, but since most of the times you can't even tell the author (since it has a very specific policy about them), you're not sure what you're reading... Bug generally speaking I stopped trusting the 'E' long time ago.

neuronic2• 11 years ago

If you don't mind me asking, have you found viable alternatives? What do you read?

chestnut-tree• 11 years ago

"There's probably plenty of reasons why no European PhD dropouts started a successful search company, but cross border e-commerce isn't one of them."

For digital goods and services, cumbersome VAT rules do make cross-border e-commerce more difficult. The recent new rules on digital goods where VAT is applied based on the location of the buyer means merchants now have to deal with different VAT rates for 28 EU nations. I can see the rationale for such an approach, and it is meant be fairer...but in practice it's cumbersome and bureaucratic. Users now have to supply their address details for simply downloading software (in order for the merchant to confirm their location). There is no benefit to the user other than having to give more of their personal info away to merchants. Plus, now merchants have to retain all that personal data for many years for accounting and auditing purposes.

Harmonising VAT on physical goods will probably never happen, but the EU could have proposed a single VAT rate for digital goods and services which might actually have gained traction. Did they ever pursue this? If not, why not?

The people from the European Commission who are helping shape the "Digital Single Market" don't always inspire confidence even if they have the best of intentions: https://ec.europa.eu/commission/2014-2019/ansip/blog/euvat_e...

musername2• 11 years ago

last time i ordered from swiss to germany, tax used to be paid on import and there is the possibility to file for tax return on export. So, this change only moves the responsibility of paying the tax back to the seller. Offering a billing adress for online shopping is standard in almost every case. They are just closing a schutzluecke (a gap, a lack of protection)

vanderZwan• 11 years ago

Harmonising VAT on physical goods will probably never happen

I wouldn't say that too quickly. People tend to paint the EU as some bureaucratic behemoth, but the whole point of the project was to vastly reduce administrative overhead for deploying to EU markets, and it has done so quite successfully. Compare "meet EU standards and it can be sold everywhere in the EU" to "have to double check the standards for every country we want to deploy to" - it's pretty obvious why the former is easier to deal with.

In fact, one of the biggest problems it is currently facing is that it's running out of things to fix in that sense. When it was about standardizing, I don't know, legally allowed substances in perfume, the benefits of standardisation far outweighed the hassle of changing local regulation. Now that its doing all kinds of things that can't be summarized as "everyone will (begrudgingly) go along because even in the worst case it benefits every involved nation", it's much harder to reach a consensus this way (paraphrasing a few books on the EU from memory).

Anyway, standardised VAT rules could fall under the old "benefits everyone"-category of projects, even for non-digital goods, so who knows?

Oletros2• 11 years ago

But rather than trying to rein in American firms

Taking into account that the most fined companies regarding anti trust proceedings are European, I don't know how this claim is not BS

EdwardDiego3• 11 years ago

Why do Americans insist on generalising the many countries and cultures of Europe into one big amorphous blob and then generalising about Blob Europe? Just because the EU exists, doesn't mean that Europe is suddenly an equivalent to the 52 states of the US.

Different countries within the EU have different laws, different markets, different cultures, different ways of doing business, and most obviously, different languages. Germany is different to France is different to the UK is different to the Czech Republic is different to Turkey.

This is why there's no single "European search engine" - and this is why America is the most attractive (and competed in) market for digital products - it's huge, well-off, and it's a lot more homogenous (at least in language and general culture) than Europe.

skrebbel7• 11 years ago

Why do Americans insist on generalising the many countries and cultures of Europe into one big amorphous blob and then generalising about Blob Europe?

I'm not entirely sure what you're responding to, but the Economist is a European publication.

EdwardDiego3• 11 years ago

Ah, you're right. (I was reading this earlier submission on the same matter: http://www.eweek.com/cloud/why-europes-regulatory-war-agains... and lumped the two together).

Although I would probably expand that out to ask why people from the UK also like to reason about (continental) Europe as a singular entity also, when they should certainly know better.

gitah• 11 years ago

This is exactly what was said in the article. The EU isn't a common market for internet companies so EU startups can't scale the same way as US ones.

People are talking about the EU as a blob because the EU as a blob is the one making the anti-trust accusations.

zaroth• 11 years ago

With opinions like these, no wonder they're looking to tax Google for its success:

  “Our online businesses are today dependent on a few non-
  EU players,” said Mr Oettinger. “This must not be the
  case again in the future.”

So, just to be clear, if Google were based in an EU country, then everything they are doing would be fine?

neuronic2• 11 years ago

Yes it would and this is called politics. It is a game that is thousands of years old and I am glad you are waking up to it.

Oletros2• 11 years ago

So, just to be clear, if Google were based in an EU country, then everything they are doing would be fine?

No, it would be exactly the same

Europe v Google: Nothing to stand on

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