This week’s blistering attack on Google by 24.com, the Cape Town-based digital publishing arm of JSE-listed media and technology giant Naspers, in which it accused the US company of dodging taxes in South Africa, is just the latest such attack by a Naspers company.
In 2011, Brazilian online price comparison company Buscapé, which is controlled by Naspers, filed a complaint asking Brazil’s Council for Administrative Defence to investigate allegations that Google abused its dominant position by using Internet search results to favour its other commercial interests. This matter is still under investigation.
Buscapé and Naspers also led private antitrust litigation against Google in the Brazilian courts. The search engine giant, which stood accused of manipulating search results in favour of its own online shopping comparison service, won that case in 2012. However, Buscapé has appealed against the court’s decision and the matter is ongoing.
Another Naspers business, the Poland-based Allegro Group, has also challenged Google, in 2012 joining the FairSearch.org coalition, which was formed to fight what the coalition has called Google’s “anticompetitive search and business practices, which harm consumers by curbing innovation and choice”.
FairSearch describes itself as a “group of businesses and organisations united to promote economic growth, innovation and choice across the Internet ecosystem by fostering and defending competition in online and mobile search”.
“Based on growing evidence that Google is abusing its search monopoly to thwart competition, we believe policymakers must act now to protect competition, transparency and innovation in online search,” the coalition says on its website.
Other members of FairSearch.org include Microsoft, Nokia, Oracle and Buscapé.
“Any effective and permanent end to Google’s anticompetitive practices must be applied globally, be legally binding and come with strong mechanisms for ongoing monitoring and enforcement to prevent the search giant from restoring its abusive practices,” FairSearch.org says on its website. “As long as competition is threatened anywhere, as in Eastern Europe, where the Allegro Group operates in more than 15 countries, consumers and innovators will continue to lose out everywhere.”
Google isn’t saying much about 24.com’s accusations that it is dodging South African taxes — including payroll and value-added tax (VAT) — beyond that it complies with tax laws in every country in which it operates.
In a brief statement, it says that under current South African tax rules, VAT reporting and remittance is the responsibility of Google’s advertisers. That’s set to change from 1 April, when suppliers of digital goods and services will have to register as VAT vendors.
In its statement on Tuesday, 24.com CEO Geoff Cohen accused Google of making it hard for local digital publishers to compete because it transacts, he alleged, through an offshore entity “without having to declare revenue or profits”.
The Naspers unit said that “some estimates” put Google’s revenue from online advertising in South Africa as as high as R1bn. This makes the potential losses for South African companies and losses in tax revenues “significant”, it said.
“In the digital age, we accept that we compete with businesses from all over the world. However, it is clearly wrong that, as we invest in building a taxpaying business employing hundreds of South Africans, we are competitively disadvantaged through aggressive tax-planning strategies of global businesses,” said Cohen.
Google has come under fire in other jurisdictions, including the UK, Australia, France and Italy, over allegations that it uses creative methods to avoid paying taxes. — (c) 2014 NewsCentral Media
