Turkey Suing Google for $47M in Back Taxes

Dear World:

Google is advertising in your countries.

Duh.

Turkey has recently determined that Google owes them $47M US (71M Turkish lira) in back taxes on advertising sold in Turkey. The government maintains that because Google sells advertising in Turkey and maintains an office and registered subsidiary in the country.

Google, on the other hand, points out that “it runs its ad network operations from Ireland and thus is not obliged to pay taxes in Turkey merely because it owns a subsidiary there.” The suit recognizes that bills and checks (or should I say cheques?) for such advertising are addressed from/to the company’s European headquarters in Dublin.

Says TechCrunch:

In a statement, Google said it is acting in accordance with the tax laws of every country in which it operates, including Turkish laws, and that its negotiations with the government on this issue are ongoing. . . .

We’ve also been in touch with a Turkish lawyer, who tells us the government is making a valid claim, pointing out that Google has set up a full-fledged company called Google Reklamcılık ve Pazarlama Ltd. Şti. (which means Google Advertising and Marketing Ltd.) in Turkey rather than what he refers to as a ‘liaison’ branch. Had it done the latter, says the lawyer, the company would have had to pay very little or no taxes at all.

Personally, I’m a little skeptical of the Turkish government’s claim, mostly because if Google has really been taxable all this time (and since Google is the #1 online and search ad company in Turkey), they (the government or Google) would have figured this out a lot sooner. Did the Turkish government just figure out they could tax Google? Or is this, as TechCrunch points out, just a bargaining tactic tor force Google’s negotiations to go faster?

(Note: the Turkish government says they’ve determined this after a year of investigating. Again, a year? It doesn’t take a year to figure out that someone should be paying you taxes, especially not if a Turkish lawyer can figure it out in one email. If they really wanted the taxes, they could have indicated that Google should be paying taxes at the beginning of the investigation instead of stalling a year while Google racked up more income that they could penalize. I think being dishonest like that should be reason enough to lose the suit.)

Here’s what I think: if you really want to tax Google, countries of the world, then do it—but pass a new law that they can’t get out of. Don’t try to cobble together a legal argument, backform your present laws that may or may not fit the situation, or stall an entire year to try to squeeze more out of them. Because, after all, taxing Internet companies for selling stuff in your jurisdiction has worked really well in New York, North Carolina, etc.

What do you think? Will Turkey get their cash, will the case get thrown out, or are they really just hoping for Google to settle for any amount? Will this make Google reluctant to operate in that country in the future?

Will “Bing Losing Sting” Have a Familiar Ring?

I can’t decide if this is newsworthy or just our buddies over at StatCounter trying to get a little pub for themselves. Back in July they were reporting the June search engine numbers on the 2nd when every other reporting agency (Nielsen, comScore and HitWise) waited for their numbers to come in.

Now the Dublin based information provider is hitting the news with news that bing has suffered a greater than one percent drop in market share for the month of September. Even with that news a more revealing number could be the near 3 percentage points better that bing was in September of ’09 v. MSN Search and Live Search in September of ’08. eWeek reports

“The trend has been downwards for Bing since mid-August,” said StatCounter CEO Aodhan Cullen. “The wheels haven’t fallen off but the underlying trend must be a little worrying for Microsoft.” See StatCounter’s chart here.

All in all these monthly reports of search engine market share leaders are getting a bit boring. There has been little or no movement that would truly make even a ripple in the Google Ocean. As we get further into bing’s existence and the idea of Yahoo and bing cohabitating in search over the next few years the shine has worn off and I think we are likely headed back to business as usual.

Why that happens is that Google is constantly in the news for everything other than search so their brand is more often than not getting some kind of lift for no reason other than Google is Google and that’s it.

So is it a fantasy to think that someday, someone will bring Google down off their search perch? I doubt it will happen in the near term. In the meantime, I think I am going to wait until someone tells me that Google has fallen before I send much time contemplating whether their share being 60 v 70 points higher then the next in line is significant.

Early Returns for US Search Traffic are In. Bing!

What would be the best way for a research firm to get some notice in a market that has two or three dominant players that most turn to? Well, get the first numbers into the market place around how well Bing has performed for Microsoft. Reuters reports that StatCounter, a Dublin based research firm has done just that.

The company is based in Dublin and has published results that are based on 4 billion pageloads per month monitored through a network of websites. Drumroll please?

Bing, launched on June 3 but available to some users a few days earlier, took 8.23 percent of U.S. Web searches in June, up from 7.81 percent for Microsoft search just prior to its rollout and 7.21 percent in April, said Internet data firm StatCounter.

Google lost share slightly, dipping to 78.48 percent from 78.72 percent before Bing. Yahoo Inc, the perennial No. 2 in the market, rose to 11.04 percent from 10.99 percent.

Cymbal crash! In a nice piece of headline sensationalism, Reuters titled the article “Microsoft’s Bing Search Wins Share from Google”. Good stuff to make you read further but the numbers, at least from StatCounter, don’t really bear out the ‘win’.

In fact, one might say that even though there was an uptick in Microsoft search traffic (as well as a slight one for Yahoo) the change of ½ a percent is negligible at best and could be accounted for in normal error ranges as nothing positive at all. Now factor in the $100 or so million that Microsoft has assigned to the rollout of Bing and the frequency of the ads seen for the new decision engine it may be fair to say these numbers are a huge disappointment rather than any form of hope. If Bing doesn’t get traction early it may just be a true blip and a non-issue for Google moving forward.

StatCounter though, really wants to create some sort of competition here.

“At first sight, a 1 percent increase in market share does not appear to be a huge return on the investment Microsoft has made in Bing but the underlying trend appears positive,” StatCounter Chief Executive Adohan Cullen said in a statement.

Underlying trend? After one month? That’s almost as bad as basing company performance on short term (quarterly) results and we all know where that leads. Look, I think Google could really use a strong competitor. It would help the consumer and it would be likely to make Google even stronger by being pushed a bit. These numbers, however, will not make anyone at Google even hiccup. In fact, the re-branding efforts of Yahoo are likely to cause more consternation for the Google because at least Yahoo is realistic about its search prospects. Oh and by the way, Yahoo is still #2 despite the Bing rollout.

If Bing can overtake Yahoo for 2nd place then that might be news. Nearly one month into this race, though, this kind of result is hard to get excited about and certainly not worthy of the proclamation that Google is losing ground.