EU Seeks To Overcome “Loser” Digital Status With Single Market, New Taxes On U.S. Web Companies

EU digital czar Günther Oettinger is signaling that he wants to make a series of moves to level the digital playing field for European internet companies vs. U.S. giants such as Google and Facebook. He would like to see much greater European investment in the internet sector and the near-term creation of a single digital market, for improved efficiency.

But taxes are also on the table.

In an interview with the Wall Street Journal (WSJ) Oettinger, who characterized Europe as a current “loser” in the internet sector, says Europe will create a single digital market to help startups operate across the continent, improve overall efficiency and to overcome squabbling and inconsistency among countries regarding privacy and taxation.

Ireland and Luxembourg have benefited by luring non-European (chiefly U.S.) internet companies with low taxation. In so doing they’ve drawn the ire of other countries in the European Union by allegedly undermining those countries’ higher taxes.

European economies still struggling to recover from the recession are looking for new sources of revenue and to close perceived loopholes that allow U.S. companies to operate in Europe without paying their “fair share.” Everyone from Google and Facebook to Amazon and Apple have been accused of skirting European taxation by operating in Ireland or Luxembourg.

This uneven taxation would potentially be addressed by a single market, which would also allow for more effective privacy regulation, Oettinger told the WSJ. He has previously said that he would also like to see a tougher antitrust settlement with (or action against) Google, though he has no authority in that particular matter, which is governed by another administrative body in Europe.

Beyond this, Oettinger is also a proponent of taxing Google’s search results under the umbrella (or pretense) of copyright protection. The underlying notion is to subsidize domestic industries by taxing foreign companies perceived to be undermining them. Yet efforts to extract revenue for European publishers in this way have proven unsuccessful to disastrous in Germany and Spain.

Oettinger also is concerned about the European automotive sector, which is facing potential competition from non-European startups such as Tesla and Google’s autonomous driving initiative.

Oettinger told the WSJ that U.S. dominance of the internet would “not [be] forever.”

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association.